2012 Annual Report and Form 20-F

UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 20-FANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2012Commission file number 1-32575Royal Dutch Shell plc(Exact name of registrant as specified in its charter)England and Wales(Jurisdiction of incorporation or organisation)Carel van Bylandtlaan 30, 2596 HR, The Hague, The NetherlandsTel. no: 011 31 70 377 9111royaldutchshell.shareholders@shell.com(Address of principal executive offices)Securities registered pursuant to Section 12(b) of the ActTitle of Each ClassName of Each Exchange on Which RegisteredAmerican Depositary Shares representing two A ordinary sharesNew York Stock Exchangeof the issuer with a nominal value of €0.07 eachAmerican Depositary Shares representing two B ordinary sharesNew York Stock Exchangeof the issuer with a nominal value of €0.07 each1.875% Guaranteed Notes due 2013 New York Stock Exchange4.0% Guaranteed Notes due 2014 New York Stock Exchange0.625% Guaranteed Notes due 2015 New York Stock Exchange3.1% Guaranteed Notes due 2015 New York Stock Exchange3.25% Guaranteed Notes due 2015 New York Stock Exchange1.125% Guaranteed Notes due 2017 New York Stock Exchange5.2% Guaranteed Notes due 2017 New York Stock Exchange4.3% Guaranteed Notes due 2019 New York Stock Exchange4.375% Guaranteed Notes due 2020 New York Stock Exchange2.375% Guaranteed Notes due 2022 New York Stock Exchange2.25% Guaranteed Notes due 2023 New York Stock Exchange6.375% Guaranteed Notes due 2038 New York Stock Exchange5.5% Guaranteed Notes due 2040 New York Stock Exchange3.625% Guaranteed Notes due 2042 New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: noneSecurities for which there is a reporting obligation pursuant to Section 15(d) of the Act: noneIndicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the periodcovered by the annual report.Outstanding as of December 31, 2012:3,706,535,798 A ordinary shares with a nominal value of €0.07 each.2,599,337,678 B ordinary shares with a nominal value of €0.07 each.Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Í Yes ‘ NoIf this report is an annual or transition report, indicate by check mark if the registrant is not required to file to Section 13 pursuant reportsor 15(d) of the Securities Exchange Act of 1934. ‘ Yes Í NoNote — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934 from their obligations under those Sections.Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Í Yes ‘ NoIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding12 months (or for such shorter period that the registrant was required to submit and post such files). Í Yes ‘ NoIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer Í Accelerated filer ‘ Non-accelerated filer ‘Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S. GAAP ‘ International Financial Reporting Standards as issued by the International AccountingStandards Board Í Other ‘If “Other” has been checked in response to the previous question, indicate by check mark which financialstatement item the registrant has elected to follow. Item 17 ‘ Item 18 ‘If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). ‘ Yes Í NoCopies of notices and communications from the Securities and Exchange Commission should be sent to:Royal Dutch Shell plcCarel van Bylandtlaan 302596 HR, The Hague, The NetherlandsAttn: Michiel Brandjes

2 Shell Annual Report and Form 20-F 2012 reports.shell.comAbout this ReportABBREVIATIONSCURRENCIES$ US dollar€ euro£ sterlingCHFSwiss francUNITS OF MEASUREMENTacreapproximately 0.004 square kilometresb(/d)barrels (per day)boe(/d)barrels of oil equivalent (per day); natural gas volumes areconverted to oil equivalent using a factor of 5,800 scf per barrelMMBtumillion British thermal unitsmtpamillion tonnes per annumper dayvolumes are converted to a daily basis using a calendar yearscf(/d)standard cubic feet (per day)PRODUCTSGTLLNGLPGNGLgas to liquidsliquefied natural gasliquefied petroleum gasnatural gas liquidsMISCELLANEOUSADSAmerican Depositary ShareAGMAnnual General MeetingCCScurrent cost of suppliesCO 2carbon dioxideDBPDeferred Bonus PlanEMTNeuro medium-term noteEPSearnings per shareHSSEhealth, safety, security and environmentIFRICInterpretation(s) issued by the IFRS Interpretations CommitteeIFRSInternational Financial Reporting Standard(s)LTIPLong-term Incentive PlanOMLoil mining leaseOPECOrganization of the Petroleum Exporting CountriesOPLoil prospecting licencePSCproduction-sharing contractPSPPerformance Share PlanR&Dresearch and developmentREMCORemuneration CommitteeRSPRestricted Share PlanSECUnited States Securities and Exchange CommissionTRCFtotal recordable case frequencyTSRtotal shareholder returnWTIWest Texas Intermediate

eports.shell.com Shell Annual Report and Form 20-F 2012 3About this ReportABOUT THIS REPORTThis Report serves as the Annual Report and Accounts in accordancewith UK requirements and as the Annual Report on Form 20-F as filedwith the SEC for the year ended December 31, 2012, for Royal DutchShell plc (the Company) and its subsidiaries (collectively known asShell). It presents the Consolidated Financial Statements of Shell(pages 99-137), the Parent Company Financial Statements of Shell(pages 159-167) and the Financial Statements of the Royal Dutch ShellDividend Access Trust (pages 171-174). Cross references toForm 20-F are set out on pages 175-176 of this Report.In this Report “Shell” is sometimes used for convenience wherereferences are made to the Company and its subsidiaries in general.Likewise, the words “we”, “us” and “our” are also used to refer tosubsidiaries in general or to those who work for them. Theseexpressions are also used where no useful purpose is served byidentifying the particular company or companies. “Subsidiaries” and“Shell subsidiaries” as used in this Report refer to companies overwhich the Company, either directly or indirectly, has control through amajority of the voting rights or the right to exercise control or to obtainthe majority of the benefits and be exposed to the majority of the risks.The Consolidated Financial Statements consolidate the financialstatements of the Company and all subsidiaries. The companies inwhich Shell has significant influence but not control are referred to as“associates” and companies in which Shell has joint control arereferred to as “jointly controlled entities”. Joint ventures are comprisedof jointly controlled entities and jointly controlled assets. In this Report,jointly controlled entities and associates are also referred to as “equityaccountedinvestments”. The term “Shell interest” is used forconvenience to indicate the direct and/or indirect ownership interestheld by Shell in a venture, partnership or company, after exclusion ofall third-party interests.Except as otherwise specified, the figures shown in the tables in thisReport represent those in respect of subsidiaries only, withoutdeduction of the non-controlling interest. However, the term “Shellshare” is used for convenience to refer to the volumes of hydrocarbonsthat are produced, processed or sold through both subsidiaries andequity-accounted investments. All of a subsidiary’s share ofproduction, processing or sales volumes are included in the Shellshare, even if Shell owns less than 100% of the subsidiary. In the caseof equity-accounted investments, however, Shell-share figures arelimited only to Shell’s entitlement. In all cases, royalty payments in kindare deducted from the Shell share.The financial statements contained in this Report have been preparedin accordance with the provisions of the Companies Act 2006 andwith International Financial Reporting Standards (IFRS) as adopted bythe European Union. As applied to the financial statements, there areno material differences from IFRS as issued by the InternationalAccounting Standards Board (IASB); therefore, the financial statementshave been prepared in accordance with IFRS as issued by the IASB.IFRS as defined above includes IFRIC.Except as otherwise noted, the figures shown in this Report are statedin US dollars. As used herein all references to “dollars” or “$” are tothe US currency.The Business Review and other sections of this Report contain forwardlookingstatements (within the meaning of the US Private SecuritiesLitigation Reform Act of 1995) concerning the financial condition,resultsofoperationsandbusinessesofShell.Allstatementsotherthanstatements of historical fact are, or may be deemed to be, forwardlookingstatements. Forward-looking statements are statements offuture expectations that are based on management’s currentexpectations and assumptions and involve known and unknown risksand uncertainties that could cause actual results, performance orevents to differ materially from those expressed or implied in thesestatements. Forward-looking statements include, among other things,statements concerning the potential exposure of Shell to market risksand statements expressing management’s expectations, beliefs,estimates, forecasts, projections and assumptions. These forwardlookingstatements are identified by their use of terms and phrasessuch as “anticipate”, “believe”, “could”, “estimate”, “expect”,“goals”, “intend”, “may”, “objectives”, “outlook”, “plan”, “probably”,“project”, “risks”, “scheduled”, “seek”, “should”, “target”, “will” andsimilar terms and phrases. There are a number of factors that couldaffect the future operations of Shell and could cause those results todiffer materially from those expressed in the forward-lookingstatements included in this Report, including (without limitation):(a) price fluctuations in crude oil and natural gas; (b) changes indemand for Shell’s products; (c) currency fluctuations; (d) drilling andproduction results; (e) proved reserves estimates; (f) loss of marketshare and industry competition; (g) environmental and physical risks;(h) risks associated with the identification of suitable potentialacquisition properties and targets, and successful negotiation andcompletion of such transactions; (i) the risk of doing business indeveloping countries and countries subject to international sanctions;(j) legislative, fiscal and regulatory developments including regulatorymeasures as a result of climate changes; (k) economic and financialmarket conditions in various countries and regions; (l) political risks,including the risks of expropriation and renegotiation of the terms ofcontracts with government entities, delays or advancements in theapproval of projects and delays in the reimbursement for shared costs;and (m) changes in trading conditions. Also see “Risk factors” foradditional risks and further discussion. All forward-looking statementscontained in this Report are expressly qualified in their entirety by thecautionary statements contained or referred to in this section. Readersshould not place undue reliance on forward-looking statements. Eachforward-looking statement speaks only as of the date of this Report.Neither the Company nor any of its subsidiaries undertake anyobligation to publicly update or revise any forward-looking statementas a result of new information, future events or other information. Inlight of these risks, results could differ materially from those stated,implied or inferred from the forward-looking statements contained inthis Report.This Report contains references to Shell’s website and to the ShellSustainability Report. These references are for the readers’convenience only. Shell is not incorporating by reference anyinformation posted on www.shell.com or in the Shell SustainabilityReport.Documents on displayDocuments concerning the Company, or its predecessors for reportingpurposes, which are referred to in this Report have been filed with theSEC and may be examined and copied at the public reference facilitymaintained by the SEC at 100 F Street, N.E., Room 1580,Washington, D.C. 20549, USA. For further information on theoperation of the public reference room and the copy charges, call theSEC at 1-800-SEC-0330. All of the SEC filings made electronically byShell are available to the public on the SEC website at www.sec.gov(commission file number 001-32575). This Report is also available,free of charge, at www.shell.com/annualreport or at the offices ofShell in The Hague, the Netherlands and London, UK. Copies of thisReport also may be obtained, free of charge, by mail.

4 Shell Annual Report and Form 20-F 2012 reports.shell.comAbout this ReportTABLE OF CONTENTS5 Chairman’s message6 Chief Executive Officer’s review8 Business Review8 Performance indicators10 Selected financial data11 Business overview13 Risk factors16 Summary of results and strategy20 Upstream35 Downstream41 Corporate42 Liquidity and capital resources46 Our people47 Environment and society51 Section 13(r) of the US Securities Exchange Act of 1934 disclosure52 The Board of Royal Dutch Shell plc55 Senior Management56 Report of the Directors60 Directors’ Remuneration Report77 Corporate governance89 Additional shareholder information96 Report on the Annual Report and Accounts97 Report on the Annual Report on Form 20-F98 Consolidated Financial Statements138 Supplementary information – oil and gas (unaudited)157 Independent Auditors’ Report to the Members of Royal Dutch Shell plc158 Parent Company Financial Statements168 Independent Auditors’ Report to Computershare Trustees (Jersey) Limitedas Trustee of the Royal Dutch Shell Dividend Access Trust169 Report of Independent Registered Public Accounting Firm170 Royal Dutch Shell Dividend Access Trust Financial Statements175 Cross reference to Form 20-F177 Exhibits178 Signatures

eports.shell.com Shell Annual Report and Form 20-F 2012 5Chairman’s messageCHAIRMAN’S MESSAGEIn 2012, we continued to deliver on our strategy in the face of anuncertain economic environment. At Shell, we naturally pay closeattention to short-term economic conditions, but we take a long-term,strategic view of the Company’s development. We continue to investin, and maintain, a diverse portfolio of assets, despite economicheadwinds.This gives us a resilience that enables us to build for the future: we cancontinue to develop major projects to help meet rising energy demand,while operating a global network of refineries and chemical plants thathelp us derive maximum value from the resources we produce. Webalance growth opportunities and investment returns, whilecontinuously seeking to improve operational safety standards,competitiveness and innovation.The global economic growth rate for the year fell slightly, to anestimated 3.2% from 3.9% for 2011. The average Brent crude oilprice for the year was $112 per barrel, very close to the figure for2011.Our dividends in 2012 increased to approximately $11 billion,making them the largest in our sector. We expect to increasedividends for the first quarter of 2013 by 4.7%, compared with thesame quarter of 2012.Energy and climateOur solid foundations and strategy will enable us to continue to growin a volatile world facing many difficult challenges. One of thegreatest of these challenges is how to meet rising energy demand,while significantly reducing carbon dioxide (CO 2 )emissions.Shell estimates that by 2050, global energy demand could increaseby up to 80%, as living standards rise and the world’s populationgrows from seven to nine billion.Renewable energy, including biofuels, will play a role. Our Raízenjoint venture in Brazil turns sugar cane into ethanol, which couldreduce overall CO 2 emissions significantly compared with the gasolineit replaces. By 2050, renewable sources could provide about 30% ofthe world’s energy. However, fossil fuels are still likely to meet abouttwo-thirds of energy demand.Natural gas, the cleanest burning fossil fuel, is central to our long-termbusiness strategy. Shell is a major supplier of natural gas that powershomes and businesses. In North America, we are unlocking gastrapped in tight and shale rock formations. The dramatic increase ingas supplies there, as a result of the shale gas revolution, has loweredprices and brought other advantages. When used to displace coal inelectricity generation, it could reduce CO 2 emissions by about half.Now the benefits of tight and shale gas are spreading to other parts ofthe world, such as China, and we are at the forefront of thisdevelopment.The world will also need to address tensions between supplies of thelinked essentials of water, energy and food, which could becomecritical as the population grows. Energy is needed to produce food,and water is needed to produce energy. Shell is leading efforts tounderstand these stresses, and we are finding ways to recycle and usewater more efficiently.Innovation has a vital role to play in the challenges we face. Since2007, we have spent more than $1 billion a year on research anddevelopment, and continue to deploy new technology. For example,we have formed Sirius Well Manufacturing Services, an internationalwell services company, in partnership with China National PetroleumCorporation. The 50:50 joint venture was incorporated in 2012, andwill use advanced techniques to drill multiple wells for tight, shale andcoalbed gas extraction in an efficient, repeatable way. It has potentialacross the world.We continue to invest in the quality of our people. Our graduate andexperienced recruitment programmes, supported by structuredlearning and development, are focused on providing the capability weneed for success in the future.Learning lessonsAs more accessible resources are depleted, those in challengingenvironments will be essential in meeting global energy demand in thedecades ahead. In 2012, we took the first steps in exploring for newresources off the coast of Alaska. Later events involving our drillingships were most regrettable. We have since decided to pauseexploration drilling in 2013, to prepare plans and equipment foractivity at a later stage. Alaska remains an area of high potential forShell in the long term. We will learn lessons from our experience, andcontinue to explore for resources there in a careful and measured way.We will also continue to invest in developing capabilities that help usexplore for energy resources in the right way: safely and responsibly,with respect for the environment and the communities we operatealongside.Jorma OllilaChairmanBUSINESS REVIEW

6 Shell Annual Report and Form 20-F 2012 reports.shell.comChief Executive Officer’s reviewCHIEF EXECUTIVE OFFICER’SREVIEWWe made good progress in 2012 toward improving our performance,even as we dealt with continued volatile economic conditions. We areon target to meet strategic objectives. And we are delivering theprojects that form the foundation of our aim to become the world’smost competitive and innovative energy company.Still, there is work to do. We are focused on further improving ouroperating performance in key areas, such as oil and gas productionand internal processes that influence customer satisfaction.Let me highlight some of 2012’s milestones and achievements. Ouroverall safety performance in 2012 matched that of 2011. And wecontinued our strong focus on ensuring our facilities are safely run andmaintained. The Shell Sustainability Report has details on our safetyand environmental performance.For 2012 our earnings on a current cost of supplies basis attributableto shareholders were $27 billion. Cash flow from operating activitieswas $46 billion and, excluding working capital movements, was$43 billion. Net capital investment was $30 billion, as we build asolid foundation for future growth.We produced 3.3 million barrels of oil equivalent per day in 2012, up3% from 2011 excluding the effect of divestments and exits, withimportant contributions from our Pearl GTL plant in Qatar, which isnow ramped up, and the Pluto LNG Project in Australia, through ourparticipation in Woodside Petroleum Ltd. Equity LNG sales volumes of20.2 million tonnes were up 7% compared with 2011.In exploration, we continue to expand our portfolio, adding 120,000square kilometres of new exploration acreage in 2012, includingpositions in liquids-rich shales. We participated in seven notableconventional exploration discoveries and appraisals, and 10successful unconventional appraisals.Harnessing innovationWe are building on our heritage as innovators and gaining publicrecognition for our accomplishments. Shell was one of 50 innovationleaders worldwide identified by the MIT Technology Review. We alsoreceived industry awards for our Perdido deep-water project in theGulf of Mexico and our Prelude floating LNG project.We continue to fine-tune our global network of technology centres tosupport future business opportunities. That includes increasing ourcapabilities in India and China. In November, we laid the foundationstone for a new technology centre in Bangalore, India, which we aimto build into a world-class technology hub.Our Downstream business had a good operating performance for theyear, with reduced levels of unplanned downtime. We continued tobuild on the strength of Shell’s brand in markets with growth potential.In Brazil our Raízen biofuels joint venture is making good progress. Inits first full year of operation, the venture made a notable contributionto Downstream earnings. Last year we broke ground on Shell’s seventhlubricants blending plant in mainland China, to meet rising demandthere. And we also announced plans to build a blending plant inIndonesia, another expanding market in Asia.Our accomplishments in 2012 helped underpin Shell’s strong trackrecord since 2010. Over the last three years, our earnings on acurrent cost of supplies basis attributable to shareholders increased by45% and our cash flow from operating activities increased by 69%.Compared with our major competitors, over the past three years wehave delivered the highest rates of growth in earnings per share andcash flow from operating activities.Building our futureLooking to the future, the projects that will help drive growth areadvancing well. We have about 30 projects under construction. Weproduced the first oil from the Gumusut-Kakap project off the coast ofMalaysia and that will ramp up once a floating production facility is inplace. We added a new development phase to our Changbei tight-gasoperation in China, adding nearly 1,700 square kilometres, as well asagreeing with our partner, China National Petroleum Corporation, topotentially develop the main reservoir.In October, we cut the first steel for the hull of our ground-breakingPrelude floating LNG project. In November, the hull for the Mars Bproject was completed in South Korea and shipped to Texas forinstallation in the Gulf of Mexico. And we took the final investmentdecision on the Quest carbon capture and storage project associatedwith our oil sands operations in Canada, which will reduce ourenvironmental footprint. In all, we took final investment decisions onseven projects during the year.With our progress in 2012, the growth agenda set out at thebeginning of the year is on track. It includes $175-200 billion of cashflow from operating activities, excluding working capital movements,for 2012-2015, assuming the Brent oil price remains in the range of$80-100 per barrel and conditions for North American natural gasand downstream margins improve relative to 2012. It also includes netcapital investment of $120-130 billion, and a competitive dividend forshareholders.Looking further ahead, we are considering about 30 additionalprojects, giving us an attractive set of options for the longer term. Weare now more constrained by capital than by opportunities, whichallows us to focus resources where the potential for growth is greatest.Gas leadershipLet me highlight one area where we are already industry leaders andthat has great potential for the future: integrated gas projects, whichinclude LNG and gas-to-liquids (GTL), such as our Pearl plant.Integrated gas projects contributed approximately 40% of our totalearnings in 2012.Integrated gas builds on our strengths in exploration and production,our downstream expertise in creating and marketing high-valueproducts, and our know-how in managing huge projects. Growth willcome from Australia, where we have an additional 7 million tonnesper year under construction. Longer term, we are studying projectswith capacity of another 20 million tonnes per year, so there issignificant growth potential.North America is one region of opportunity. The shale gas revolutionthere has unlocked vast resources that provide an attractively pricedfeedstock. We will soon supply LNG for long-haul trucks in Canada.And we have other LNG, GTL and chemicals options on the drawingboard.

eports.shell.com Shell Annual Report and Form 20-F 2012 7Chief Executive Officer’s reviewIn February 2013, we agreed to acquire part of Repsol S.A.’s LNGportfolio, subject to regulatory approval and other conditionsprecedent. This acquisition will extend our international LNG portfolio.I expect our strength in integrated gas projects will be one of thedrivers of our earnings and cash flow in the coming decades.Strategic prioritiesAs we push ahead with our strategy, we have taken a fresh look athow we manage our portfolio. Going forward we are using a clear setof strategic themes to drive our choices about investment, people andinnovation.First we have our upstream and downstream ”engines”, which aremature businesses. They generate much of our cash flow. We willcontinue to invest to keep them running smoothly and to extractadditional value.Next we have our growth priorities, which are three areas of greatopportunity for us in the years ahead, thanks to our superiortechnology and innovation. They are integrated gas, deep water andresources plays, such as shale oil and gas.BUSINESS REVIEWFinally we have future opportunities for the longer term, including theArctic, Iraq, Kazakhstan, Nigeria, and heavy oil. We also continue toramp up our conventional exploration activities, which we think is acost-effective way of identifying new resources.To conclude, we are making good progress toward our objectives.We continue to work hard to improve our operating performance. Andwe have clear strategic priorities to drive growth and value for ourshareholders.Peter VoserChief Executive Officer

8 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Performance indicatorsBUSINESS REVIEWPERFORMANCE INDICATORSKey performance indicatorsTotal shareholder return2012 -0.2% 2011 17.1%Total shareholder return (TSR) is the difference between the share priceat the start of the year and the share price at the end of the year, plusgross dividends delivered during the calendar year (reinvestedquarterly), expressed as a percentage of the year-start share price. TheTSRs of major publicly traded oil and gas companies can be directlycompared, providing a way to determine how Shell is performingagainst its industry peers.Refinery and chemical plant availability2012 92.9% 2011 91.2%Refinery and chemical plant availability is the weighted average of theactual uptime of plants as a percentage of their maximum possibleuptime. The weighting is based on the capital employed adjusted forcash and non-current liabilities. It excludes downtime due touncontrollable factors, such as hurricanes. This indicator is a measureof operational excellence of Shell’s Downstream manufacturingfacilities.Net cash from operating activities ($ billion)2012 46 2011 37Net cash from operating activities is the total of all cash receipts andpayments associated with our sales of oil, gas, chemicals and otherproducts. The components that provide a reconciliation from incomefor the period are listed in the “Consolidated Statement of CashFlows”. This indicator reflects Shell’s ability to generate cash for bothinvestment and distribution to shareholders.Total recordable case frequency (injuries per million working hours)2012 1.3 2011 1.2Total recordable case frequency (TRCF) is the number of staff orcontractor injuries requiring medical treatment or time off for everymillion hours worked. It is a standard measure of occupational safety.Project delivery2012 90% 2011 79%Project delivery reflects Shell’s capability to complete major projectson time and within budget on the basis of targets set in the annualBusinessPlan.Thesetofprojectsconsistsofatleast20Shell-operatedcapital projects that are in the execution phase (post final investmentdecision).Production available for sale (thousand boe/d)2012 3,262 2011 3,215Production is the sum of all average daily volumes of unrefined oil andnatural gas produced for sale by Shell subsidiaries and the Shell shareof equity-accounted investments. The unrefined oil comprises crude oil,natural gas liquids, synthetic crude oil and bitumen. The gas volume isconverted into equivalent barrels of oil to make the summationpossible. Changes in production have a significant impact on Shell’scash flow.Equity sales of liquefied natural gas (million tonnes)2012 20.2 2011 18.8Equity sales of liquefied natural gas (LNG) is a measure of theoperational performance of Shell’s Upstream business and the LNGmarket demand.

eports.shell.com Shell Annual Report and Form 20-F 2012 9Business Review > Performance indicatorsAdditional performance indicatorsEarnings on a current cost of supplies basis attributable toRoyal Dutch Shell plc shareholders ($ million)2012 27,044 2011 28,625Proved oil and gas reserves attributable to Royal Dutch Shell plcshareholders (million boe)2012 13,556 2011 14,250Earnings per share on a current cost of supplies basis ($)2012 4.32 2011 4.61Earnings on a current cost of supplies (CCS) basis attributable to RoyalDutch Shell plc shareholders is the income for the period, adjusted forthe after-tax effect of oil-price changes on inventory andnon-controlling interest. CCS earnings per share is calculated bydividing CCS earnings attributable to shareholders by the averagenumber of shares outstanding. See page 16 and Note 2 to the“Consolidated Financial Statements”.Net capital investment ($ million)2012 29,803 2011 23,503Net capital investment is defined as capital expenditure, adjusted for:proceeds from disposals; exploration expense excluding explorationwells written off; investments in equity-accounted investments; andleases and other items. See Notes 2 and 4 to the “ConsolidatedFinancial Statements” for further information.Return on average capital employed2012 12.7% 2011 15.9%Return on average capital employed (ROACE) is defined as annualincome, adjusted for after-tax interest expense, as a percentage ofaverage capital employed during the year. Capital employed is thesum of total equity and total debt. ROACE measures the efficiency ofShell’s utilisation of the capital that it employs and is a commonmeasure of business performance. See page 45.Proved oil and gas reserves attributable to Royal Dutch Shell plcshareholders are the total estimated quantities of oil and gas fromShell subsidiaries (excluding reserves attributable to non-controllinginterest) and the Shell share of equity-accounted investments thatgeoscience and engineering data demonstrate, with reasonablecertainty, to be recoverable in future years from known reservoirs, asat December 31, under existing economic conditions, operatingmethods and government regulations. Gas volumes are converted intobarrels of oil equivalent (boe). Reserves are crucial to an oil and gascompany, since they constitute the source of future production.Reserves estimates are subject to change based on a wide variety offactors, some of which are unpredictable. See “Risk factors”.Operational spills of more than 100 kilograms2012 204 2011 211The operational spills indicator reflects the total number of incidents inwhich 100 kilograms or more of oil or oil products were spilled by aShell-operated entity as a result of its operations. The number for 2011was updated from 207 to reflect completion of investigations intospills.Employees (thousand)2012 87 2011 90The employees indicator consists of the annual average full-timeemployee equivalent of the total number of people on full-time or parttimeemployment contracts with Shell subsidiaries.BUSINESS REVIEWGearing2012 9.2% 2011 13.1%Gearing is defined as net debt (total debt less cash and cashequivalents) as a percentage of total capital (net debt plus totalequity), at December 31. It is a measure of the degree to which Shell’soperations are financed by debt. For further information see Note 15to the “Consolidated Financial Statements”.

10 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Selected financial dataSELECTED FINANCIAL DATAThe selected financial data set out below is derived, in part, from theConsolidated Financial Statements. This data should be read inconjunction with the Consolidated Financial Statements and relatedNotes, as well as the Business Review in this Report.CONSOLIDATED STATEMENT OF INCOME AND OF COMPREHENSIVE INCOME DATA$ MILLION2012 2011 2010 2009 2008Revenue 467,153 470,171 368,056 278,188 458,361Income for the period 26,840 31,185 20,474 12,718 26,476Income attributable to non-controlling interest 248 267 347 200 199Income attributable to Royal Dutch Shell plc shareholders 26,592 30,918 20,127 12,518 26,277Comprehensive income attributable to Royal Dutch Shell plcshareholders 27,178 29,727 20,131 19,141 15,228All results are from continuing operations.CONSOLIDATED BALANCE SHEET DATA$ MILLION2012 2011 2010 2009 2008Total assets 360,325 345,257 322,560 292,181 282,401Total debt 37,754 37,175 44,332 35,033 23,269Share capital 542 536 529 527 527Equity attributable to Royal Dutch Shell plc shareholders 188,494 169,517 148,013 136,431 127,285Non-controlling interest 1,433 1,486 1,767 1,704 1,581EARNINGS PER SHARE $2012 2011 2010 2009 2008Basic earnings per €0.07 ordinary share 4.25 4.98 3.28 2.04 4.27Diluted earnings per €0.07 ordinary share 4.24 4.97 3.28 2.04 4.26SHARESNUMBER2012 2011 2010 2009 2008Basic weighted average number of A and B shares 6,261,184,755 6,212,532,421 6,132,640,190 6,124,906,119 6,159,102,114Diluted weighted average number of A and B shares 6,267,839,545 6,221,655,088 6,139,300,098 6,128,921,813 6,171,489,652OTHER FINANCIAL DATA$ MILLION2012 2011 2010 2009 2008Net cash from operating activities 46,140 36,771 27,350 21,488 43,918Net cash used in investing activities 28,453 20,443 21,972 26,234 28,915Dividends paid 7,682 7,315 9,979 10,717 9,841Net cash used in financing activities 10,630 18,131 1,467 829 9,394Increase/(decrease) in cash and cash equivalents 7,258 (2,152) 3,725 (5,469) 5,532Earnings/(losses) by segment [A]Upstream 22,162 24,455 15,935 8,354 26,506Downstream 5,350 4,289 2,950 258 5,309Corporate (209) 86 91 1,310 (69)Total segment earnings 27,303 28,830 18,976 9,922 31,746Attributable to non-controlling interest (259) (205) (333) (118) (380)Earnings on a current cost of supplies basis attributable toRoyal Dutch Shell plc shareholders [B] 27,044 28,625 18,643 9,804 31,366Net capital investment [A]Upstream 25,320 19,083 21,222 22,326 28,257Downstream 4,275 4,342 2,358 6,232 3,104Corporate 208 78 100 324 60Total 29,803 23,503 23,680 28,882 31,421[A] See Notes 2 and 4 to the “Consolidated Financial Statements”.[B] See table on page 16.

eports.shell.com Shell Annual Report and Form 20-F 2012 11Business Review > Business overviewBUSINESS OVERVIEWHistoryFrom 1907 until 2005, Royal Dutch Petroleum Company and The“Shell” Transport and Trading Company, p.l.c. were the two publicparent companies of a group of companies known collectively as the“Royal Dutch/Shell Group”. Operating activities were conductedthrough the subsidiaries of these parent companies. In 2005, RoyalDutch Shell plc became the single parent company of Royal DutchPetroleum Company and of The “Shell” Transport and TradingCompany, p.l.c., now The Shell Transport and Trading CompanyLimited.Royal Dutch Shell plc (the Company) is a public limited companyregistered in England and Wales and headquartered in The Hague,the Netherlands.ActivitiesShell is one of the world’s largest independent oil and gas companiesin terms of market capitalisation, operating cash flow and oil and gasproduction. We aim to sustain our strong operational performanceand continue our investments primarily in countries that have thenecessary infrastructure, expertise and remaining growth potential.Such countries include Australia, Brazil, Brunei, Canada, China,Denmark, Germany, Malaysia, the Netherlands, Nigeria, Norway,Oman, Qatar, Russia, the UK and the USA.We are bringing new oil and gas supplies on-stream from major fielddevelopments. We are also investing in growing our integrated gasactivities. For example, our Pearl GTL plant completed its ramp-up atthe end of 2012. In Downstream we seek innovative ways to marketLNG, for example through the use of LNG in the transport sector.At the same time, we are exploring for oil and gas in prolificconventional geological formations, such as those found in Australia,Brazil and the Gulf of Mexico. But we are also exploring forhydrocarbons in formations, such as low-permeability reservoirs in theUSA, Australia, Canada and China, which can be developed byfracturing techniques.We also have a focused portfolio of refineries and chemical plants.Furthermore, we are a leading biofuel producer and fuel retailer inBrazil, through our Raízen joint venture. We have a strong retailposition not only in the major industrialised countries, but also in thedeveloping ones. The distinctive Shell pecten, (a trademark in usesince the early part of the twentieth century), and trademarks in whichthe word Shell appears, support this marketing effort throughout theworld. A strong patent portfolio underlies the technology that weemploy in our various businesses. In total, Shell currently has morethan 14,000 granted patents and pending patent applications.BusinessesUpstream International manages the Upstream businesses outside theAmericas. It explores for and recovers crude oil, natural gas andnatural gas liquids, liquefies and transports gas, and operates theupstream and midstream infrastructure necessary to deliver oil and gasto market. Upstream International also manages Shell’s LNG and GTLbusinesses. Since January 2013, it manages its operations primarilyby line of business, with this structure overlaying individual countryorganisations. This organisation is supported by activities such asExploration and New Business Development. Previously activities wereorganised primarily by geographical location.Upstream Americas manages the Upstream businesses in North andSouth America. It explores for and recovers crude oil, natural gas andnatural gas liquids, transports gas and operates the upstream andmidstream infrastructure necessary to deliver oil and gas to market.Upstream Americas also extracts bitumen from oil sands that isconverted into synthetic crude oil. Additionally, it manages theUS-based wind business. It manages its operations by line of business,supported by activities such as Exploration and New BusinessDevelopment.Downstream manages Shell’s refining and marketing activities for oilproducts and chemicals. These activities are organised into globallymanaged classes of business, although some are managed regionallyor provided through support units. Refining includes manufacturing,supply and shipping of crude oil. Marketing sells a range of productsincluding fuels, lubricants, bitumen and liquefied petroleum gas (LPG)for home, transport and industrial use. Chemicals produces andmarkets petrochemicals for industrial customers, including the rawmaterials for plastics, coatings and detergents. Downstream alsotrades Shell’s flow of hydrocarbons and other energy-related products,supplies the Downstream businesses, governs the marketing andtrading of gas and power, and provides shipping services.Additionally, Downstream oversees Shell’s interests in alternativeenergy (including biofuels but excluding wind) and CO 2 management.Projects & Technology manages the delivery of Shell’s major projectsand drives the research and innovation to create technology solutions.It provides technical services and technology capability covering bothUpstream and Downstream activities. It is also responsible forproviding functional leadership across Shell in the areas of safety andenvironment, and contracting and procurement.BUSINESS REVIEW

12 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Business overviewSegmental reportingUpstream combines the operating segments Upstream Internationaland Upstream Americas, which have similar economic characteristics,products and services, production processes, types and classes ofcustomers, and methods of distribution. Upstream and Downstreamearnings include their respective elements of Projects & Technologyand of trading activities. Corporate represents the key supportfunctions comprising holdings and treasury, headquarters, centralfunctions and Shell’s self-insurance activities.REVENUE BY BUSINESS SEGMENT(INCLUDING INTER-SEGMENT SALES)$ MILLION2012 2011 2010UpstreamThird parties 43,431 42,260 32,395Inter-segment 51,119 49,431 35,803Total 94,550 91,691 68,198DownstreamThird parties 423,638 427,864 335,604Inter-segment 772 782 612Total 424,410 428,646 336,216CorporateThird parties 84 47 57Total 84 47 57REVENUE BY GEOGRAPHICAL AREA(EXCLUDING INTER-SEGMENT SALES)$ MILLION2012 % 2011 % 2010 %Europe 184,223 39.4 187,498 39.9 137,359 37.3Asia, Oceania,Africa 156,310 33.5 148,260 31.5 110,955 30.2USA 91,571 19.6 91,946 19.6 77,660 21.1Other Americas 35,049 7.5 42,467 9.0 42,082 11.4Total 467,153 100.0 470,171 100.0 368,056 100.0

eports.shell.com Shell Annual Report and Form 20-F 2012 13Business Review > Risk factorsRISK FACTORSThe risks discussed below could have a material adverse effectseparately, or in combination, on our operational performance,earnings, cash flows and financial condition. Accordingly, investorsshould carefully consider these risks.We are exposed to fluctuating prices of crude oil, natural gas,oil products and chemicals.Prices of oil, natural gas, oil products and chemicals are affected bysupply and demand, both globally and regionally. Moreover, pricesfor oil and gas can move independently from each other. Factors thatinfluence supply and demand include operational issues, naturaldisasters, weather, political instability, conflicts, economic conditionsand actions by major oil-exporting countries. Price fluctuations couldhave a material effect. For example, in a low oil and gas priceenvironment, Shell would generate less revenue from its Upstreamproduction, and as a result certain long-term projects might becomeless profitable, or even incur losses. Additionally, low oil and gasprices could result in the debooking of proved oil or gas reserves, ifthey become uneconomic in this type of environment. Prolongedperiods of low oil and gas prices, or rising costs, could also result inprojects being delayed or cancelled, as well as in the impairment ofcertain assets. In a high oil and gas price environment, we couldexperience sharp increases in cost and under some production-sharingcontracts our entitlement to proved reserves would be reduced. Higherprices could also reduce demand for our products. Lower demand forour products might result in lower profitability, particularly in ourDownstream business.Our ability to achieve strategic objectives depends on howwe react to competitive forces.We face competition in each of our businesses. While we seek todifferentiate our products, many of them are competing in commoditytypemarkets. If we do not manage our expenses adequately, our costefficiency could deteriorate and our unit costs may increase. This inturn could erode our competitive position. Increasingly, we competewith government-run oil and gas companies, particularly in seekingaccess to oil and gas resources. Today, these government-runcompanies control vastly greater quantities of oil and gas resourcesthan the major, publicly held oil and gas companies. Government-runentities have access to significant resources and may be motivated bypolitical or other factors in their business decisions, which may harmour competitive position or hinder our access to desirable projects.As our business model involves trading and treasury risks,we are affected by the global macroeconomic environment aswell as financial and commodity market conditions.Shell subsidiaries and equity-accounted investments are subject todiffering economic and financial market conditions throughout theworld. Political or economic instability affects such markets. Shell usesdebt instruments such as bonds and commercial paper to raisesignificant amounts of capital. Should our access to debt marketsbecome more difficult, the potential impact on our liquidity could havean adverse effect on our operations. Commodity trading is animportant component of our supply and distribution function. Tradingand treasury risks include, among others, exposure to movements incommodity prices, interest rates and foreign exchange rates,counterparty default and various operational risks (see also page 83).As a global company doing business in more than 70 countries, weare exposed to changes in currency values and exchange controls.While we undertake some currency hedging, we do not do so for all ofour activities. See Notes 6 and 21 to the “Consolidated FinancialStatements”. Shell has significant financial exposure to the euro andcould be materially affected by a significant change in its value or anystructural changes to the European Union (EU) or the EuropeanEconomic and Monetary Union affecting the euro. While we do nothave significant direct exposure to sovereign debt, it is possible thatour partners and customers may have exposure which could impairtheir ability to meet their obligations to us. Therefore, a sovereign debtdowngrade or default could have a material adverse effect on Shell.Our future hydrocarbon production depends on the deliveryof large and complex projects, as well as on our ability toreplace proved oil and gas reserves.We face numerous challenges in developing capital projects,especially large ones. Challenges include uncertain geology, frontierconditions, the existence and availability of necessary technology andengineering resources, availability of skilled labour, project delays,expiration of licences and potential cost overruns, as well as technical,fiscal, regulatory, political and other conditions. These challenges areparticularly relevant in certain developing and emerging marketcountries, such as Iraq and Kazakhstan, and in frontier areas, such asthe Arctic. Such potential obstacles may impair our delivery of theseprojects, as well as our ability to fulfil related contractual commitments.Future oil and gas production will depend on our access to newproved reserves through exploration, negotiations with governmentsand other owners of proved reserves and acquisitions, as well asdeveloping and applying new technologies and recovery processes toexisting fields and mines. Failure to replace proved reserves couldresult in lower future production.OIL AND GAS PRODUCTION AVAILABLE FOR SALEMILLION BOE [A]2012 2011 2010Shell subsidiaries 825 811 855Shell share of equity-accounted investments 369 362 355Total 1,194 1,173 1,210[A] Natural gas volumes are converted to oil equivalent using a factor of5,800 scf per barrel.PROVED DEVELOPED AND UNDEVELOPED OIL ANDGAS RESERVES [A][B] (AT DECEMBER 31)MILLION BOE [C]2012 2011 2010Shell subsidiaries 9,873 10,320 10,176Shell share of equity-accounted investments 3,701 3,946 4,097Total 13,574 14,266 14,273Attributable to non-controlling interest [D] 18 16 24Attributable to Royal Dutch Shell plcshareholders 13,556 14,250 14,249[A] We manage our total proved reserves base without distinguishing betweenproved reserves from subsidiaries and those from equity-accountedinvestments.[B] Includes proved reserves associated with future production that will beconsumed in operations.[C] Natural gas volumes are converted to oil equivalent using a factor of5,800 scf per barrel.[D] Represents proved reserves attributable to non-controlling interest in Shellsubsidiaries.An erosion of our business reputation would have a negativeimpact on our brand, our ability to secure new resources andour licence to operate.Shell is one of the world’s leading energy brands, and its brand andreputation are important assets. The Shell General Business Principlesand Code of Conduct govern how Shell and its individual companiesconduct their affairs. It is a challenge for us to ensure that allemployees and contractors, well above 100,000 in total, comply withBUSINESS REVIEW

14 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Risk factorsthe principles. Failure – real or perceived – to follow these principles,or other real or perceived failures of governance or regulatorycompliance, could harm our reputation. This could impact our licenceto operate, damage our brand, harm our ability to secure newresources and limit our ability to access the capital market.Our future performance depends on the successfuldevelopment and deployment of new technologies.Technology and innovation are essential to Shell. If we do not developthe right technology, do not have access to it or do not deploy iteffectively, the delivery of our strategy and our licence to operate maybe adversely affected. We operate in environments where the mostadvanced technologies are needed. While these technologies areregarded as safe for the environment with today’s knowledge, there isalways the possibility of unknown or unforeseeable environmentalimpacts that could harm our reputation, licence to operate or exposeus to litigation or sanctions.Rising climate change concerns could lead to additionalregulatory measures that may result in project delays andhigher costs.In the future, in order to help meet the world’s energy demand, weexpect our production to rise and more of our production to come fromunconventional sources than at present. Energy intensity of productionof oil and gas from unconventional sources can be higher than that ofproduction from conventional sources. Therefore, it is expected thatboth the CO 2 intensity of our production, as well as our absoluteUpstream CO 2 emissions, will increase as our business grows.Examples of such developments are our expansion of oil sandsactivities in Canada and our gas-to-liquids project in Qatar.Additionally, as production from Iraq increases, we expect that CO 2emissions from flaring will rise. We are working with our partners onfinding ways to capture the gas that is flared. Over time, we expectthat a growing share of our CO 2 emissions will be subject toregulation and carry a cost. If we are unable to find economicallyviable, as well as publicly acceptable, solutions that reduce our CO 2emissions for new and existing projects or products, we may incuradditional costs, delayed projects or reduced production in certainprojects.Moreover, continued public and political attention to climate changeconcerns, including existing and future regulatory frameworks toreduce greenhouse gas emissions, could result in increasingproduction costs, lengthening project implementation times andreducing demand for hydrocarbons.The nature of our operations exposes us to a wide range ofhealth, safety, security and environment risks.The health, safety, security and environment (HSSE) risks to which weare potentially exposed cover a wide spectrum, given the geographicrange, operational diversity and technical complexity of Shell’s dailyoperations. We have operations, including oil and gas production,transport and shipping of hydrocarbons, and refining, in difficultgeographies or climate zones, as well as environmentally sensitiveregions, such as the Arctic or maritime environments, especially indeep water. These and other operations expose us to the risk, amongothers,ofmajorprocesssafetyincidents,effectsofnaturaldisasters,social unrest, personal health and safety lapses, and crime. If a majorHSSE risk materialises, such as an explosion or hydrocarbon spill, thiscould result in injuries, loss of life, environmental harm, disruption tobusiness activities and, depending on their cause and severity,material damage to our reputation and eventually loss of licence tooperate. In certain circumstances, liability could be imposed withoutregard to Shell’s fault in the matter. Requirements governing HSSEmatters often change and are likely to become more stringent overtime. We could incur significant additional costs in the futurecomplying with such requirements or as a result of violations of, orliabilities under, HSSE laws and regulations, such as fines, penalties,clean-up costs and third-party claims.Shell mainly self-insures its risk exposures.Shell insurance subsidiaries provide insurance coverage to Shellentities, generally up to $1.15 billion per event and usually limited toShell’s percentage interest in the relevant entity. The type and extent ofthe coverage provided is equal to that which is otherwisecommercially available in the third-party insurance market. While fromtime to time the insurance subsidiaries may seek reinsurance for someof their risk exposures, such reinsurance would not provide anymaterial coverage in the event of an incident like BP DeepwaterHorizon. Similarly, in the event of a material environmental incident,there would be no material proceeds available from third-partyinsurance companies to meet Shell’s obligations.An erosion of the business and operating environment inNigeria would adversely impact Shell.We face various risks in our Nigerian operations. These risks include:security issues surrounding the safety of our people, host communities,and operations; our ability to enforce existing contractual rights;limited infrastructure; and potential legislation that could increase ourtaxes or costs of operation. The Nigerian government is contemplatingnew legislation to govern the petroleum industry which, if passed intolaw, would likely have a significant adverse impact on Shell’s existingand future activities in that country.We operate in more than 70 countries, with differing degreesof political, legal and fiscal stability. This exposes us to awide range of political developments that could result inchanges to laws and regulations. In addition, Shellsubsidiaries and equity-accounted investments face the riskof litigation and disputes worldwide.Developments in politics, laws and regulations can – and do – affectour operations. Potential developments include: forced divestment ofassets; expropriation of property; cancellation or forced renegotiationof contract rights; additional taxes including windfall taxes, restrictionson deductions and retroactive tax claims; import and exportrestrictions; foreign exchange controls; and changing environmentalregulations and disclosure requirements. Certain governments, statesand regulatory bodies have, in the opinion of Shell, exceeded theirconstitutional authority by attempting unilaterally to amend or cancelexisting agreements or arrangements; by failing to honour existingcontractual commitments; and by seeking to adjudicate disputesbetween private litigants. As a result of the financial crisis, USregulators have adopted regulations that require disclosure ofinformation on payments to governments that we believe is immaterialto investors, but that could compromise confidential commercialarrangements and create conflicting legal requirements. EU regulatorshave also proposed similar regulations. Additional regulationstargeted at the financial sector could have unintended consequencesfor our trading, treasury and pension operations. In our Upstreamactivities these developments can and do affect land tenure, re-writingof leases, entitlement to produced hydrocarbons, production rates,royalties and pricing. Parts of our Downstream activities are subject toprice controls in some countries. From time to time, cultural andpolitical factors play a role in unprecedented and unanticipatedjudicial outcomes that could adversely affect Shell. If we do not complywith policies and regulations, it may result in regulatory investigations,litigation and ultimately sanctions.

eports.shell.com Shell Annual Report and Form 20-F 2012 15Business Review > Risk factorsOur operations expose us to social instability, terrorism, actsof war, piracy and government sanctions that could have anadverse impact on our business.As seen recently in north Africa and the Middle East, social and civilunrest, both within the countries in which we operate andinternationally, can – and does – affect Shell. Potential developmentsthat could impact our business include international sanctions, conflictsincluding war, acts of political or economic terrorism and acts ofpiracy on the high seas, as well as civil unrest and local securityconcerns that threaten the safe operation of our facilities and transportof our products. For example, EU sanctions have prohibited us fromproducing oil and gas in Syria, and the USA and the EU have imposedsanctions relating to transactions involving Iran and Sudan, amongother countries. If such risks materialise, they could result in injuriesand disruption to business activities.We rely heavily on information technology systems for ouroperations.The operation of many of our business processes depends on theavailability of information technology (IT) systems. Our IT systems areincreasingly concentrated in terms of geography, number of systems,and key contractors supporting the delivery of IT services. Shell, likemany other multinational companies, has been the target of attempts togain unauthorised access through the internet to our IT systems,including more sophisticated attempts often referred to as advancedpersistent threat. Shell seeks to detect and investigate all such securityincidents, aiming to prevent their recurrence. Disruption of critical ITservices, or breaches of information security, could have adverseconsequences for Shell.We have substantial pension commitments, whose funding issubject to capital market risks.Liabilities associated with defined benefit plans can be significant, ascanthecashfundingofsuchplans;bothdependonvariousassumptions. Volatility in capital markets, and the resultingconsequences for investment performance and interest rates, mayresult in significant changes to the funding level of future liabilities. Incase of a shortfall, Shell might be required to make substantial cashcontributions, depending on the applicable local regulations.The estimation of proved oil and gas reserves involvessubjective judgements based on available information andthe application of complex rules, so subsequent downwardadjustments are possible.The estimation of proved oil and gas reserves involves subjectivejudgements and determinations based on available geological,technical, contractual and economic information. The estimate maychange because of new information from production or drillingactivities, or changes in economic factors, including changes in theprice of oil or gas and changes in the taxation or regulatory policies ofhost governments. It may also alter because of acquisitions anddivestments, new discoveries, and extensions of existing fields andmines, as well as the application of improved recovery techniques.Published proved oil and gas reserves estimates may also be subject tocorrection due to errors in the application of published rules andchanges in guidance. Any downward adjustment would indicate lowerfuture production volumes.Many of our major projects and operations are conducted injoint ventures or associates. This may reduce our degree ofcontrol, as well as our ability to identify and manage risks.A significant share of our capital is invested in joint ventures orassociates. In cases where we are not the operator we have limitedinfluence over, and control of, the behaviour, performance and costsof operation of joint ventures or associates. Despite not having control,we could still be exposed to the risks associated with these operations.For example, our partners or members of a joint venture or anassociate (particularly local partners in developing countries) may notbe able to meet their financial or other obligations to the projects,threatening the viability of a given project.Violations of antitrust and competition law carry fines andexpose us or our employees to criminal sanctions and civilsuits.Antitrust and competition laws apply to Shell subsidiaries and equityaccountedinvestments in the vast majority of countries in which we dobusiness. Shell subsidiaries and equity-accounted investments havebeen fined for violations of antitrust and competition law. Theseinclude a number of fines by the European Commission Directorate-General for Competition (DG COMP). Due to the DG COMP’s finingguidelines, any future conviction of Shell subsidiaries or equityaccountedinvestments for violation of EU competition law could resultin larger fines. Violation of antitrust laws is a criminal offence in manycountries, and individuals can be either imprisoned or fined.Furthermore, it is now common for persons or corporations allegedlyinjured by antitrust violations to sue for damages.Shell is currently subject to a Deferred Prosecution Agreementwith the U.S. Department of Justice for violations of theForeign Corrupt Practices Act.In 2010, a Shell subsidiary agreed to a Deferred ProsecutionAgreement (DPA) with the U.S. Department of Justice (DOJ) forviolations of the Foreign Corrupt Practices Act (FCPA), which arose inconnection with its use of the freight-forwarding firm Panalpina. Also,the Company has consented to a Cease and Desist Order from theU.S. Securities and Exchange Commission (SEC) for violations of therecord keeping and internal control provisions of the FCPA as a resultof another Shell subsidiary’s violation of the FCPA, which also arose inconnection with the use of Panalpina in Nigeria. The DPA requiresShell to continue to implement a compliance and ethics programmedesigned to prevent and detect violations of the FCPA and otherapplicable anti-corruption laws throughout Shell’s operations. The DPAalso requires the Company to report to the DOJ, promptly, anycredible evidence of questionable or corrupt payments. Any violationsof the DPA, or of the SEC’s Cease and Desist Order, could have amaterial adverse effect on the Company.The Company’s Articles of Association determine thejurisdiction for shareholder disputes. This might limitshareholder remedies.Our Articles of Association generally require that all disputes betweenour shareholders in such capacity and the Company or oursubsidiaries (or our Directors or former Directors) or between theCompany and our Directors or former Directors be exclusivelyresolved by arbitration in The Hague, the Netherlands, under the Rulesof Arbitration of the International Chamber of Commerce. Our Articlesof Association also provide that, if this provision is for any reasondetermined to be invalid or unenforceable, the dispute may only bebrought to the courts of England and Wales. Accordingly, the abilityof shareholders to obtain monetary or other relief, including in respectof securities law claims, may be determined in accordance with theseprovisions. See “Corporate governance” for further information.BUSINESS REVIEW

16 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Summary of results and strategySUMMARY OF RESULTS ANDSTRATEGYINCOME FOR THE PERIOD$ MILLION2012 2011 2010Earnings by segment [A]Upstream 22,162 24,455 15,935Downstream 5,350 4,289 2,950Corporate (209) 86 91Total segment earnings 27,303 28,830 18,976Attributable to non-controlling interest (259) (205) (333)Earnings on a current cost of supplies basisattributable to Royal Dutch Shell plcshareholders 27,044 28,625 18,643Current cost of supplies adjustment [A] (463) 2,355 1,498Non-controlling interest 11 (62) (14)Income attributable to Royal Dutch Shell plcshareholders 26,592 30,918 20,127Non-controlling interest 248 267 347Income for the period 26,840 31,185 20,474[A] Segment earnings are presented on a current cost of supplies basis. SeeNote 2 to the “Consolidated Financial Statements” for further information.Earnings 2012-2010On average, 2012 realised liquids and gas prices remained stablecompared with 2011. The increase in Asia-Pacific realised gas pricesapproximately offset the decrease in Americas realised gas prices.Average realised synthetic crude oil prices for 2012 decreasedcompared with 2011. Oil and gas production available for sale in2012 was 3,262 thousand barrels of oil equivalent per day (boe/d),compared with 3,215 thousand boe/d in 2011. Excluding the impactof divestments and exits, production volumes were 3% higher than in2011. Refining margins were generally higher in 2012 than in 2011in key refining hubs, except Asia. This increase was driven by theclosure of some refining capacity and then refinery outages later in theyear, partly offset by an unfavourable economic environment andgeopolitical tensions.Earnings on a current cost of supplies basis attributable toshareholders in 2012 were $27,044 million, 6% lower than in 2011,which, in turn, were 54% higher than in 2010.In 2012, Upstream earnings were $22,162 million, compared with$24,455 million in 2011 and $15,935 million in 2010. The 9%decrease from 2011 to 2012 reflected higher depreciation charges,increased operating and exploration expenses, lower gainsassociated with the fair-value accounting of certain gas and derivativecontracts and additional tax charges, partly offset by highercontributions from our integrated gas activities (LNG and GTL). In2011, earnings increased by 53% compared with 2010, reflectinghigher realised oil and gas prices, together with higher equity LNGsales volumes, increased trading contributions and a reduced level ofimpairment, partly offset by higher operating expenses, lowerproduction volumes and increased taxes.Downstream earnings are presented on a current cost of supplies basis(CCS earnings). On this basis, the purchase price of the volumes soldduring a period is based on the current cost of supplies during the sameperiod, after making allowance for the tax effect. CCS earningstherefore exclude the effect of changes in the oil price on inventoryvaluation. Downstream earnings in 2012 were $5,350 million,compared with $4,289 million in 2011 and $2,950 million in 2010.The 25% increase from 2011 to 2012 reflected higher realised refiningmargins, lower operating expenses and a reduced level of impairment.These items were partly offset by lower trading contributions, lowerChemicals earnings, lower divestment gains and lower gains associatedwith the fair-value accounting of commodity derivatives. Earningsincreased between 2010 and 2011 as a result of higher chemicalmargins, increased trading contributions and lower operating expenses,partly offset by a larger loss in refining and lower sales volumes.Balance sheet and net capital investmentShell’s strategy to invest in the development of major growth projectsprimarily in Upstream, explains the most significant changes to thebalance sheet in 2012. Property, plant and equipment increased by$20 billion. Net capital investment was $30 billion, 27% higher thanin 2011; see Note 4 to the “Consolidated Financial Statements”. Theeffect of net capital investment on property, plant and equipment waspartly offset by depreciation, depletion and amortisation of $15billion.Of the 2012 net capital investment, approximately 85% related toUpstream projects, providing growth over the long term. They includemultibillion dollar, integrated facilities that are expected to providesignificant cash flows in the coming decades. In 2012, equityattributable to Royal Dutch Shell plc shareholders increased by$19 billion, to $188 billion, principally as a result of increasedretained earnings.Gearing was 9.2% at the end of 2012, compared with 13.1% at theend of 2011. The change reflects the increase in total equity and incash and cash equivalents.Market overviewWe estimate that global economic growth weakened to 3.2% in2012, down from 3.9% the previous year, largely as a result of therecession in the eurozone and a slowdown in most emerging markets.In our view, global economic growth in 2013 is estimated to be 3.4%,below the annual average of 3.8% of the last 10 years.Within the eurozone, uncertainty and austerity measures weighedheavily on economic sentiment and consumer and business spending.In January 2013, the International Monetary Fund (IMF) projected theeurozone economy to have contracted by 0.4% in 2012. According tothe same projections, growth of gross domestic product (GDP) inChina slowed to 7.8% in 2012, down from 9.3% in 2011, mainly dueto lower export growth and slower domestic demand growth. Otheremerging economies including Brazil, Russia and India also had lowerGDP growth rates. Brazil decelerated most to a rate of 1.0% in 2012,down from 2.7% in 2011. The USA was a notable exception in thisenvironment; its GDP growth rate accelerated in 2012 to 2.3%,compared with 1.8% in 2011.Reflecting the state of the global economy, global oil demand rose by0.9% (0.8 million b/d) in 2012 according to the International EnergyAgency December 2012 Oil Market Report. A 1.2 million b/ddemand increase in emerging economies offset a decline of0.4 million b/d in developed economies. We estimate that global gasdemand grew by about 3% in 2012 with approximately two-thirds ofthat growth coming from countries outside the Organisation forEconomic Co-operation and Development (OECD). Demand grewstrongest in Asia-Pacific, the Middle East and North America, whiledemand in Europe contracted by an estimated 1% overall, andparticularly in electricity generation.

eports.shell.com Shell Annual Report and Form 20-F 2012 17Business Review > Summary of results and strategyOIL AND NATURAL GAS PRICESThe following table provides an overview of the main oil and gas pricemarkers that Shell is exposed to:OIL AND GAS AVERAGE INDUSTRY PRICES [A]2012 2011 2010Brent ($/b) 111.67 111.26 79.50West Texas Intermediate ($/b) 94.13 95.04 79.45Henry Hub ($/MMBtu) 2.76 4.01 4.40UK National Balancing Point (pence/therm) 59.74 56.35 42.12Japan Customs-cleared Crude ($/b) 114.91 109.10 79.17[A] Yearly average prices are based on daily spot prices.The Brent crude oil price, the international crude-oil benchmark,traded in a range of $88-128 per barrel during 2012, ending theyear at $110 per barrel. Both the Brent and the West TexasIntermediate (WTI) average crude oil prices for 2012 were littlechanged compared with 2011. WTI continued to trade at a significantdiscount to Brent due to production in the US mid-continent exceedingpipeline capacity to clear the growing volumes. This resulted in crudeoil being transported to the Gulf coast by less efficient modes oftransport, such as rail, depressing prices in landlocked areas, such asCushing, Oklahoma, where WTI is delivered.Unlike crude-oil pricing, which is global in nature, gas prices varysignificantly from region to region.In the USA, the average natural gas price at Henry Hub was 31%lower in 2012 compared with 2011, and traded in a range of$1.91-3.90 per million British thermal units (MMBtu). Domesticproduction increased strongly, particularly from onshore gas, whichmore than offset increased demand, and led to lower prices. The dailyHenry Hub spot price briefly dropped below $2 per MMBtu in Aprilfollowing an unusually warm winter, meaning that inventories werehigh and production had to be discouraged. The daily price recoveredto a monthly average of $2.50 per MMBtu in May, and continued torecover due to warmer than normal summer temperatures stimulatinggas-fired power generation demand due to its price advantage overcoal.InEurope,pricesrose.IntheUK,theaveragepriceattheUKNationalBalancing Point was 6% higher compared with 2011. In continentalEurope, price increases at the main gas trading hubs in Belgium,Germany and the Netherlands were similar to those at the UK NationalBalancing Point. These prices reflect a tightening of LNG markets andhigher prices in Asia-Pacific. The use of oil-indexed gas pricing isdecreasing in continental Europe, with many natural gas contracts nowincluding spot market pricing as a major component.We also produce and sell natural gas in regions whose supply,demand and regulatory circumstances differ markedly from those inthe USA or Europe. Long-term contracted LNG prices in Asia-Pacificare predominantly indexed to the price of Japan Customs-clearedCrude (JCC). In Japan, LNG import contracts have historically beenindexed to the JCC benchmark, as burning crude and fuel oil is thealternative option for Japanese power utilities.OIL AND NATURAL GAS PRICES FOR INVESTMENT EVALUATIONThe range of possible future crude oil and natural gas prices used inproject and portfolio evaluations within Shell is determined after anassessment of short-, medium- and long-term price drivers underdifferent sets of assumptions. Historical analysis, trends and statisticalvolatility are considered in this assessment, as are analyses of possiblefuture economic conditions, geopolitics, actions by the Organizationof the Petroleum Exporting Countries (OPEC), supply costs and thebalance of supply and demand. Sensitivity analyses are used to testthe impact of low-price drivers, such as economic weakness, and highpricedrivers, such as strong economic growth and low investmentlevels in new production capacity. Short-term events, such as relativelywarm winters or cool summers affecting demand, and supplydisruptions due to weather or politics, contribute to price volatility.We expect oil and gas prices to remain volatile. For the purposes ofmaking investment decisions, generally we test the economicperformance of long-term projects against price ranges of $70-110 perbarrel for Brent oil and $3-5 per MMBtu for gas at Henry Hub. As part ofour normal business practice, the range of prices used for this purpose issubject to review and change, and was last updated in the fourth quarterof 2012.REFINING AND PETROCHEMICAL MARKET TRENDSIndustry refining margins were generally higher in 2012 than in 2011in key refining hubs, except Asia. Support for margins in 2012 camefrom refinery closures in North America and Europe at the beginningof the year, and from unplanned refinery outages later in the year.Some demand growth, especially around the summer holiday drivingseason in the USA, also contributed, although the economicenvironment and geopolitical tensions dampened further gains. In theUSA a surge of light sweet crude supply and infrastructure bottlenecksalso acted to support margins.A key driver of refining margins in 2013 is expected to be middledistillate demand growth with some support from gasoline during themiddle of the year. The overall outlook remains uncertain, with theeconomic environment remaining fragile, a structural overcapacity inglobal refining, and geopolitical tensions in some regions that couldlead to supply disruptions.Industry chemical margins in Europe and Asia during 2012 werelower than in 2011 due to declining demand in Europe and lowerdemand growth in Asia. US ethane cracker margins rose significantlydue to increased supply of natural gas liquids, and the wide pricedifferential between crude oil and natural gas. The outlook forpetrochemicals in 2013 remains uncertain as demand is stronglycorrelated to economic growth.Strategy and outlookSTRATEGYOur strategy seeks to reinforce our position as a leader in the oil andgas industry, while helping to meet global energy demand in aresponsible way. We aim to create competitive returns forshareholders. Safety and environmental and social responsibility areat the heart of our activities.Intense competition exists for access to upstream resources and to newdownstream markets. But we believe that our technology, projectdelivery capability and operational excellence will remain keydifferentiators for our businesses. We expect about 80% of our capitalinvestment in 2013 to be in our Upstream businesses.In Upstream we focus on exploration for new liquids and natural gasreserves, and on developing major new projects where our technologyand know-how add value to the resources holders.We focus on a series of strategic themes, each requiring distinctivetechnologies and risk management:▪ our upstream and downstream ”engines” are strongly cashgenerative,mature businesses, which will underpin our financialBUSINESS REVIEW

18 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Summary of results and strategyperformancetoatleasttheendofthisdecade.Hereweonlymakeinvestments in selective growth positions, and we apply Shell’sdistinctive technology and operating performance to extend theproductive lives of our assets and to enhance their profitability;▪ our growth priorities are in three strategic themes, namely integratedgas,deepwaterandresourcesplayssuchasshaleoilandgas.These will provide our medium-term growth, and we expect them tobecome core engines in the future. Here, we use the advantages ofShell’s technological know-how and global scale to unlock highlycompetitive resources positions; and▪ our future opportunities include the Arctic, Iraq, Kazakhstan,Nigeria, and heavy oil, where we believe large reserves positionscould potentially become available, with the pace of developmentdriven by market and local operating conditions.Meeting the growing demand for energy worldwide in ways thatminimise environmental and social impact is a major challenge for theglobal energy industry. We aim to improve energy efficiency in ourown operations, support customers in managing their energydemands, and continue to research and develop technologies thatincrease efficiency and reduce emissions in liquids and natural gasproduction.Our commitment to technology and innovation continues to be at thecore of our strategy. As energy projects become more complex andmore technically demanding, we believe our engineering expertisewill be a deciding factor in the growth of our businesses. Our keystrengths include the development and application of technology, thefinancial and project-management skills that allow us to deliver largefield development projects, and the management of integrated valuechains.We aim to leverage our diverse and global business portfolio andcustomer-focused businesses built around the strength of the Shell brand.OUTLOOKWe continuously seek to improve our operating performance, with anemphasis on health, safety and environment, asset performance andoperating costs. Asset sales are a key element of our strategy –improving our capital efficiency by focusing our investment on themost attractive growth opportunities. Sale of non-core assets in 2010-2012 generated $21 billion in divestment proceeds. Exits from furtherpositions in 2013 are expected to generate up to $3 billion indivestment proceeds. We have initiatives underway that are expectedto improve Shell’s integrated Downstream business, focusing on theprofitability of our portfolio and growth potential.In early 2012, Shell set out a new growth agenda, to deliver$175-200 billion of cash flow from operations excluding workingcapital movements for 2012-2015 in aggregate, some 30-50% higherthan in 2008-2011. This assumes that the Brent oil price is in therange of $80-100 per barrel and conditions for North Americannatural gas and downstream margins improve relative to 2012. Thiscash flow is to finance a 2012-2015 expected net capital investmentprogramme of $120-130 billion, an increase of some 10-20%compared with the 2008-2011 level, and fund a competitive dividendfor shareholders. Shell is on track to deliver these targets.In Upstream we have the potential to reach an average production ofsome 4.0 million boe/d in 2017-2018, compared with 3.3 millionboe/d in 2012. Shell’s strategy in Upstream is designed to drivefinancial growth, with production growth regarded as a proxy for thisover the long term. Our 2017-2018 production potential will bedriven by the timing of investment decisions and the near-termmacroeconomic outlook, and assumes some 250 thousand boe/d ofexpected asset sales and licence expiries from 2011 to 2017-2018. InDownstream we evaluate selective growth opportunities in chemicals,biofuels and growth markets.Shell has built up a substantial portfolio of options for a next wave ofgrowth. This portfolio has been designed to capture energy priceupside and manage Shell’s exposure to industry challenges from costinflation and political risk. Key elements of these opportunities are inglobal exploration and established resources positions in the Gulf ofMexico, North American tight gas, liquids-rich shales and AustralianLNG. These projects are part of a portfolio that has the potential tounderpin production growth to the end of this decade. Shell is workingto mature these projects, with an emphasis on financial returns.The statements in this Strategy and outlook section do not take intoaccount the impact of the recently announced agreement to acquirepart of Repsol S.A.’s LNG portfolio. See page 137.The statements in this Strategy and outlook section, including thoserelated to our growth strategies and our expected or potential futurecash flow from operations, net capital investment and production, arebased on management’s current expectations and certain materialassumptions and, accordingly, involve risks and uncertainties thatcould cause actual results, performance or events to differ materiallyfrom those expressed or implied herein. See page 3 and “Riskfactors”.Proved reserves and productionShell subsidiaries’ and the Shell share of equity-accounted investments’estimated net proved oil and gas reserves are summarised in the tableon page 28 and are set out in more detail in “Supplementaryinformation – oil and gas (unaudited)”.In 2012, Shell added 542 million boe of proved reserves beforetaking into account production, of which 408 million boe came fromShell subsidiaries and 134 million boe from the Shell share ofequity-accounted investments. These additions were negativelyimpacted by lower commodity prices (431 million boe) anddivestments (74 million boe).In 2012, total oil and gas production available for sale was1,194 million boe. An additional 40 million boe were produced andconsumed in operations. Production available for sale fromsubsidiaries was 825 million boe with an additional 30 million boeconsumed in operations. The Shell share of the production availablefor sale of equity-accounted investments was 369 million boe with anadditional 10 million boe consumed in operations.Accordingly, after taking into account total production, there was adecrease of 692 million boe in proved reserves, comprising447 million boe from subsidiaries and 245 million boe from the Shellshare of equity-accounted investments.Research and developmentTechnology and innovation provide ways for Shell to stand apart fromits competitors. They help our current businesses perform, and theymake our future businesses possible. We have been spending morethan any other international oil and gas company to research anddevelop innovative technology – more than $1 billion annually since2007. In 2012, research and development (R&D) expenses were$1,314 million, compared with $1,125 million in 2011 and $1,019million in 2010.Sustained investment in our key technologies continues to deliverresults. In 2012, we launched new fuels and lubricant formulations

eports.shell.com Shell Annual Report and Form 20-F 2012 19Business Review > Summary of results and strategymeeting specific customer needs for improved efficiency and betterperformance. We also began construction of what is likely to be theworld’s first floating LNG facility, more than 480 metres long and sixtimes heavier than a fully loaded aircraft carrier. The facility isdesigned to produce natural gas from the Prelude field offshoreAustralia, cool it into a liquid and pump it onto LNG tankers – all doneat sea. The idea was born and developed entirely within Shell as partof an innovation-stimulating programme called GameChanger. Also in2012, Shell committed itself to design, build and operate the world’sfirst commercial-scale facility to capture and store safely undergroundCO 2 emissions of an oil-sands project. The facility, based nearEdmonton, Canada, will help develop Shell’s CO 2 capture technology.The development of Shell technology is based on the needs of ourcustomers and partners, and is intrinsically linked to our strategicobjectives. In 2013, the key objectives of our R&D programme willremain unchanged. We will continue to focus strongly on technologiessupporting our various businesses. For example: novel seismicacquisition systems that help reveal previously unnoticed geologicaldetails; methods based on the application of chemicals, heat or solventgases to increase the amount of oil ultimately recovered from fields;and biofuels derived from non-edible plants or crop waste. We alsocontinue to work on technologies to reduce the environmental footprintof our operations and products.BUSINESS REVIEWWe remain committed to further shortening the time taken fortechnology to move from the laboratory to deployment in the field. Ourtechnology portfolio will maintain a healthy balance of new andmaturedevelopments.Thatwillmeananincreaseinthenumberofproposed concepts, more rapid termination of less promising projectsand increasing focus on larger-scale field tests and demonstrations.Our single, integrated R&D organisation will continue to bringtogether in-house technology development with external scientific,engineering and commercial partnerships. Such partnering helps toensure a healthy influx of new ideas and to speed up their realisation.Key accounting estimates and judgementsRefer to Note 3 to the “Consolidated Financial Statements” for adiscussion of key accounting estimates and judgements.Legal proceedingsRefer to Note 25 to the “Consolidated Financial Statements” for adiscussion of legal proceedings.

20 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > UpstreamUPSTREAMKEY STATISTICS$ MILLION2012 2011 2010Segment earnings 22,162 24,455 15,935Including:Revenue (including inter-segment sales) 94,550 91,691 68,198Share of profit of equity-accounted investments 8,001 7,127 4,900Production and manufacturing expenses 16,474 15,606 13,697Selling, distribution and administrativeexpenses 1,226 1,276 1,512Exploration 3,104 2,266 2,036Depreciation, depletion and amortisation 11,387 8,827 11,144Net capital investment [A] 25,320 19,083 21,222Oil and gas production available for sale(thousand boe/d) 3,262 3,215 3,314Equity LNG sales volume (million tonnes) 20.2 18.8 16.8Proved oil and gas reserves at December 31(million boe) [B] 13,556 14,250 14,249[A] See Notes 2 and 4 to the “Consolidated Financial Statements”.[B] Excludes reserves attributable to non-controlling interest in Shell subsidiaries.OverviewOur Upstream businesses explore for and extract crude oil and naturalgas, often in joint ventures with international and national oil and gascompanies. This includes the extraction of bitumen from mined oilsands which we convert into synthetic crude oil. We liquefy naturalgas by cooling and transport the liquefied natural gas (LNG) tocustomersacrosstheworld.Wealsoconvertnaturalgastoliquids(GTL) to provide high quality fuels and other products, and we marketand trade natural gas (including LNG) in support of our Upstreambusinesses.Business conditionsAccording to the International Energy Agency, oil demand in 2012increased by 0.9% (0.8 million b/d). Demand was impacted byfurther weakened global economic growth in 2012, largely as a resultof a recession in the eurozone and a slowdown in most emergingmarkets. Increased production, particularly in North America, Libyaand Iraq, helped meet this demand, partly offset by a fall in supplyfrom some Middle Eastern countries, especially Iran and Syria. Theaverage Brent crude oil price in 2012 was $112 per barrel, slightlyhigher than in 2011.Demand for gas, especially LNG, was robust in markets east of Suez.This was driven by economic growth across Asia-Pacific and nuclearpower generation capacity still being offline following Japan’s naturaldisaster in March 2011. In Europe, gas demand was lower as a result ofthe ongoing recession and competition from cheap coal imports from theUSA. Continued high levels of supply and warmer than normal weatherat the beginning of 2012 weakened gas prices in North America byapproximately 30% compared with 2011.Earnings 2012-2011Segment earnings of $22,162 million included a net gain of$2,137 million, mainly related to gains on divestments, partly offset byimpairments for natural gas assets in the USA, net tax charges anddecommissioning provisions. Segment earnings in 2011 of$24,455 million included a net gain of $3,855 million, mainly relatedto gains on divestments, the fair-value accounting of certain gas andderivative contracts, and the cost impact of the US offshore drillingmoratorium. All gains and losses identified above relate to items thatindividually exceed $50 million.Compared with 2011, segment earnings, excluding the items identifiedabove, benefited from the increased contribution of integrated gasactivities (LNG and GTL), reflecting the ramp-up of the Pearl GTL plant inQatar, higher realised LNG prices as well as increased LNG tradingcontributions and equity LNG sales volumes. Earnings also reflectedhigher realised gas prices outside the Americas. These items were morethan offset by reduced contributions from the Americas, mainly as aresult of higher depreciation, increased operating expenses, higherexploration expenses and lower realised gas prices.During 2012, our earnings in the Americas were $512 million,excluding the related items identified at the beginning of the earningssection. However, our Americas onshore gas business reported a loss,mainly due to low North American gas prices, and higherdepreciation and exploration costs. This was more than offset byearnings from our deep-water and heavy oil production.Realised global liquids prices were 1% higher than in 2011. InCanada, realised synthetic crude oil prices were 11% lower than in2011. Realised global natural gas prices were 1% higher than in2011, with a 31% decrease in the Americas and a 9% increaseoutside the Americas.In 2012, production was 3,262 thousand boe/d compared with3,215 thousand boe/d in 2011. Liquids production was down 2%and natural gas production increased by 5% compared with 2011.Natural gas represented 50% of total production in 2012.Approximately 18% of our natural gas production in 2012 was in theAmericas. Excluding the impact of divestments and exits, productionvolumes in 2012 were 3% higher than in 2011.New field start-ups and the continuing ramp-up of new projects, inparticular the ramp-up of the Pearl GTL plant in Qatar and the PlutoLNG plant in Australia (Shell indirect interest 20.8%), contributedsome 225 thousand boe/d to production in 2012, which more thanoffset the impact of field declines.Equity LNG sales volumes in 2012 were a record of 20.2 milliontonnes, 7% higher than in 2011. The increase mainly came from thefirst full year of operations for Qatargas 4, the start-up of the PlutoLNG plant in the second quarter of 2012, and the continued strongoperational performance of the Sakhalin-2 LNG plant.REALISED PRICE [A]$120$100$80$60$40$20$0Q12010Q22010Q32010Q42010Q12011Q22011Q32011International natural gasAmericas natural gasQ42011Q12012Q22012Q32012[A] Includes subsidiaries and European equity-accounted investments.Excludes deemed transfer prices.$/BOEOilQ42012Earnings 2011-2010Segment earnings in 2011 of $24,455 million included a net gain of$3,855 million as described above. Segment earnings in 2010 of$15,935 million included a net gain of $1,493 million, mainly relatedto gains on divestments, partly offset by asset impairments, the

eports.shell.com Shell Annual Report and Form 20-F 2012 21Business Review > Upstreamfair-value accounting of certain gas contracts and the cost impact ofthe US offshore drilling moratorium. All gains and losses identifiedabove relate to items that individually exceed $50 million.Excluding these gains and losses, segment earnings in 2011 were43% higher than in 2010, driven by continuing portfolio optimisation,higher realised oil, natural gas and LNG prices, higher equity LNGsales volumes and higher trading contributions, partly offset by higheroperating expenses, mainly reflecting the start-up of new projects,lower production volumes and increased taxes.Net capital investmentNet capital investment was $25 billion in 2012, compared with$19 billion in 2011 and $21 billion in 2010. Capital investment in2012 was $31 billion (of which $14 billion was explorationexpenditure, including acquisitions of unproved properties). Divestmentproceeds were $6 billion in 2012.Portfolio actions and business developmentIn Australia we increased our interest in the West Browse joint ventureto 35% and in the East Browse joint venture to 25% in an exchangewith Chevron for our 33.3% interest in Clio-Acme plus cash ofapproximately $0.5 billion.Also in Australia we formed a joint venture (Shell interest 82%) withNexus Energy and Osaka Gas to operate the Crux gas andcondensate field.In Norway we acquired BP’s 18.4% interest in the offshore Draugenfield for a consideration of $0.2 billion. Shell is already the operatorof the field and this transaction brought Shell’s interest to 44.6%.In the UK we acquired 75% of Hess Corporation’s interests in the Berylarea fields and Scottish Area Gas Evacuation system. This transactionwas completed in January 2013, increasing Shell’s production in theBerylareafieldsfrom9thousandboe/dto20thousandboe/d.Also in the UK we acquired Hess Corporation’s 15.7% interest in theSchiehallion field and its 12.9% interest in the Schiehallion floatingproduction, storage and offloading (FPSO) facility for $0.5 billion. InFebruary 2013, we also acquired an additional 5.9% interest in theoffshore Schiehallion field from Murphy Schiehallion Ltd. bringing ourinterest in the field to 55%.Low North American gas prices led to an accelerated shift inexploration and appraisal activities, along with production, fromexisting dry gas fields to those rich in liquids.In the USA Shell acquired acreage in the Delaware Permian Basin,West Texas, from Chesapeake Energy Corporation for an announcedconsideration of $1.9 billion. The acreage of approximately 2,200square kilometres, with an additional 300 square kilometres linked tocontractual conditions, is expected to be rich in oil and natural gasliquids and currently produces approximately 26 thousand boe/d withgrowth potential.We also took the following final investment decisions during 2012.In Nigeria we took the final investment decision on the Forcados YokriIntegrated Project (Shell interest 30%) and the Southern SwampAssociated Gas Gathering Project (Shell interest 30%). These projectsare expected to produce at peak production approximately90 thousand boe/d and 85 thousand boe/d respectively, and reduceflaring intensity.In Italy we took the final investment decision on the onshore TempaRossa field (Shell interest 25%) in the Basilicata region. This project isexpected to produce approximately 45 thousand boe/d at peakproduction.In Malaysia we took the final investment decision for the developmentof the Malikai deep-water oil field, part of the Block G PSC (Shellinterest 35%), offshore Sabah. The Shell-operated project is expectedto produce approximately 60 thousand boe/d at peak production.In Canada we took the final investment decision on the Quest carboncapture and storage project (Shell interest 60%) near Edmonton,Alberta. The Quest project is expected to capture and store deepunderground more than 1 mtpa of CO 2 produced in bitumen processing,and reduce direct emissions from the Scotford Upgrader by up to 35%.We continued to divest selected Upstream assets during 2012, includingour 40% participating interest in the BS-4 oil and gas exploration blockin the Santos Basin offshore Brazil; our interest in the Gassled naturalgas transport infrastructure joint venture in Norway; our 30% interest inoil mining leases 30, 34 and 40 in the Niger Delta, Nigeria; our 50%interest in the Holstein field in the Gulf of Mexico; and our interest in theSeal area within the Peace River oil sands of Alberta, Canada. Also inCanada, we sold a 20% interest in our Groundbirch tight-gas project. InAustralia we completed the sale of a 17.5% interest in the Prelude FLNGproject to INPEX, and a 10% interest to KOGAS. We also completed thesale of a further 5% interest to CPC Corporation in the first quarter of2013.Available-for-sale productionIn 2012, hydrocarbon production from new start-ups and thecontinuing ramp-up of new projects more than offset the impact of fielddeclines, and the impact of divestments and exits. There was alsofurther upside from new wells and improved reliability compared with2011, partly offset by changes in contractual entitlements and othernon-operational factors.Production growth was mainly driven by the continued ramp-up ofnew projects, notably our Pearl GTL plant in Qatar, the start-up of thePluto LNG Project in Australia, and the first full year of production fromQatargas 4. Further additions also came from new start-ups such asHarweel in Oman, and the early first production from Gumusut-Kakapin Malaysia.In Qatar we achieved full GTL production at our Pearl GTL plant at theend of the fourth quarter of 2012, with both trains reaching 90% ofcapacity. This completed the ramp-up period for this project. The plantis designed to run at sustained operating rates of 90% or higher.In Malaysia the Gumusut-Kakap field, located about 120 kilometresoffshore Sabah, began a phase of early production via the MurphySabah Oil operated Kikeh production facility. A dedicated floatingproduction system is currently under construction for the Gumusut-Kakap field (Shell interest 33%), which is Shell’s first deep-wateropportunity in the country, and is expected to produce approximately135 thousand boe/d at peak production.In the USA first production was achieved at the Caesar/Tonga deepwaterproject (Shell interest 22.5%) in the Gulf of Mexico. At peakproduction, the project is expected to produce approximately40 thousand boe/d.In Oman production began at the Harweel Enhanced Oil Recoveryproject, which is expected to produce approximately 30 thousandboe/d at peak production.BUSINESS REVIEW

22 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > UpstreamProved reservesShell subsidiaries’ and the Shell share of equity-accounted investments’estimated net proved oil and gas reserves are summarised in the tableon page 28 and are set out in more detail in “Supplementaryinformation - oil and gas (unaudited)”.In 2012, Shell added 542 million boe of proved reserves beforetaking into account production, of which 408 million boe came fromShell subsidiaries and 134 million boe from the Shell share ofequity-accounted investments.The change in the yearly average commodity prices between 2011and 2012 resulted in a net negative impact on the proved reserves of431 million boe.Shell subsidiariesBefore taking into account production, Shell subsidiaries added408 million boe of proved reserves in 2012. This comprised655 million barrels of oil and natural gas liquids and a reduction of247 million boe (1,431 thousand million scf) of natural gas. Of the408 million boe: 268 million boe were from the net effects of revisionsand reclassifications; a net decrease of 69 million boe related toacquisitions and divestments; 196 million boe came from extensionsand discoveries; and 13 million boe were from improved recovery.After taking into account production of 855 million boe (of which30 million boe were consumed in operations), Shell subsidiaries’proved reserves decreased by 447 million boe in 2012.Shell subsidiaries’ proved developed reserves increased by 19 millionboe to 6,502 million boe, while proved undeveloped reservesdecreased by 466 million boe to 3,371 million boe.The total addition of 408 million boe before taking into accountproduction included a net negative impact from commodity pricechanges of 438 million boe of proved reserves.SYNTHETIC CRUDE OILAs part of the total proved reserves’ addition of 542 million boe, weadded 131 million barrels to our synthetic crude oil proved reserves. In2012, we had synthetic crude oil production of 48 million barrels ofwhich 2 million barrels were consumed in operations. At December 31,2012, we had total synthetic crude oil proved reserves of 1,763 millionbarrels, of which 1,271 million barrels were proved developed reservesand 492 million barrels were proved undeveloped reserves.BITUMENAs part of the total proved reserves’ addition of 542 million boe, weadded 1 million barrels of bitumen proved reserves. After taking intoaccount production of 7 million barrels, bitumen proved reserves were49 million barrels at December 31, 2012.Shell share of equity-accounted investmentsBefore taking into account production, there was an increase of134 million boe in the Shell share of equity-accounted investments’proved reserves in 2012. This comprised 91 million barrels of oil andnatural gas liquids and 43 million boe (248 thousand million scf) ofnatural gas. Of the 134 million boe: 129 million boe were from thenet effects of revisions and reclassifications; a net decrease of5 million boe related to acquisitions and divestments; 7 million boecame from extensions and discoveries; and 3 million boe were fromimproved recovery.After taking into account production of 379 million boe (of which10 million boe were consumed in operations), the Shell share ofequity-accounted investments’ proved reserves decreased by245 million boe in 2012.The Shell share of equity-accounted investments’ proved developedreserves decreased by 5 million boe to 3,002 million boe, and provedundeveloped reserves decreased by 240 million boe to 699 millionboe.The total addition of 134 million boe before taking into accountproduction included a net positive impact from commodity pricechanges of 7 million boe of proved reserves.Proved undeveloped reservesIn 2012, Shell subsidiaries’ and the Shell share of equity-accountedinvestments’ proved undeveloped reserves (PUD) decreased by706 million boe to 4,070 million boe. This is the result of additions of122 million boe of new PUD offset by the maturation of 828 millionboe of PUD to proved developed reserves through project execution.During 2012, Shell spent $9.3 billion on development activitiesrelated to PUD maturation.Proved undeveloped reserves held for five years or more (PUD5+) atDecember 31, 2012, were 1,012 million boe. These relate toinstallation of gas compression and drilling of additional gas wells,which will be executed when required to support existing gas deliverycommitments (Australia, the Netherlands, Nigeria, Norway, thePhilippines and Russia); gas cap blow-down awaiting end-of-oilproduction (Nigeria); ongoing onshore oil and gas development(USA); Gulf of Mexico water-injection project execution in progress(USA); and major complex projects taking longer than five years todevelop (such as in Kazakhstan). Most of the PUD5+ are held inlocations where Shell has a proven track record of developing similarmajor projects or where project execution is ongoing but is takinglonger than expected.Delivery commitmentsShell sells crude oil and natural gas from its producing operationsunder a variety of contractual obligations. Most contracts generallycommit Shell to sell quantities based on production from specifiedproperties, although some natural gas sales contracts specify deliveryof fixed and determinable quantities, as discussed below.In the past three years, Shell met all contractual delivery commitments.In the period 2013 to 2015, Shell is contractually committed to deliverto third parties and equity-accounted investments a total ofapproximately 4,600 thousand million scf of natural gas from Shellsubsidiaries and equity-accounted investments. The sales contractscontain a mixture of fixed and variable pricing formulae that aregenerally referenced to the prevailing market price for crude oil,natural gas or other petroleum products at the time of delivery.The shortfall between Shell’s delivery commitments and its proveddeveloped reserves is estimated at 24% of Shell’s total gas deliverycommitments. This shortfall is expected to be met through thedevelopment of proved undeveloped reserves as well as new projectsand purchases on the spot market.ExplorationDuring 2012, Shell participated in seven notable conventionalexploration discoveries and appraisals in Australia, Brazil, Malaysia,Nigeria and the USA, and 10 notable successful unconventionalappraisals in Australia, Canada, China, and the USA.

eports.shell.com Shell Annual Report and Form 20-F 2012 23Business Review > UpstreamIn 2012, Shell participated in 230 productive exploratory wells withproved reserves allocated (Shell share: 168 wells). See page 155 forfurther information.In 2012, Shell participated in a further 314 wells (Shell share: 214wells) that remained pending determination at December 31, 2012.In 2012, Shell added acreage to its exploration portfolio mainly fromnew licences in Albania, Australia, Benin, Canada, China, Malaysia,New Zealand, Russia, South Africa, Tanzania, the UK and the USA.In total, Shell secured rights to 120,000 square kilometres of newexploration acreage, including positions in liquids-rich shales. Thiswas offset by divestments and relinquishments of acreage, which tookplace in various countries (mainly Australia, China, Egypt, Germany,Italy, New Zealand, Norway and Tanzania).Business and propertyShell subsidiaries and equity-accounted investments are involved in allaspects of Upstream activities, including matters such as land tenure,entitlement to produced hydrocarbons, production rates, royalties,pricing, environmental protection, social impact, exports, taxes andforeign exchange.The conditions of the leases, licences and contracts under which oil andgas interests are held vary from country to country. In almost all casesoutside North America the legal agreements are generally granted by orentered into with a government, government entity or government-run oiland gas company, and the exploration risk usually rests with theindependent oil and gas company. In North America these agreementsmay also be with private parties who own mineral rights. Of theseagreements, the following are most relevant to Shell’s interests:▪ licences (or concessions), which entitle the holder to explore forhydrocarbons and exploit any commercial discoveries. Under alicence, the holder bears the risk of exploration, development andproduction activities, and is responsible for financing these activities.In principle, the licence holder is entitled to the totality of productionless any royalties in kind. The government, government entity orgovernment-run oil and gas company may sometimes enter as a jointventureparticipant sharing the rights and obligations of the licencebut usually without sharing the exploration risk. In a few cases, thegovernment entity, government-run oil and gas company or agencyhas an option to purchase a certain share of production;▪ lease agreements, which are typically used in North America andare usually governed by similar terms as licences. Participants mayinclude governments or private entities, and royalties are either paidin cash or in kind; and▪ production-sharing contracts (PSCs) entered into with a government,government entity or government-run oil and gas company. PSCsgenerally oblige the independent oil and gas company, ascontractor, to provide all the financing and bear the risk ofexploration, development and production activities in exchange for ashare of the production. Usually, this share consists of a fixed orvariable part that is reserved for the recovery of the contractor’s cost(cost oil). The remaining production is split with the government,government entity or government-run oil and gas company on a fixedor volume/revenue-dependent basis. In some cases, the government,government entity or government-run oil and gas company willparticipate in the rights and obligations of the contractor and willshare in the costs of development and production. Such participationcan be across the venture, or on a field-by-field basis. Additionally,as the price of oil or gas increases above certain predeterminedlevels, the independent oil and gas company’s entitlement share ofproduction normally decreases. Accordingly, its interest in a projectmay not be the same as its entitlement.EUROPEDenmarkWe hold a non-operating interest in a producing concession coveringthe majority of our activities in Denmark. The concession was grantedin 1962 and will expire in 2042. Our interest reduced to 36.8% from46% in July 2012, when the government entered the partnership witha 20% interest and the government profit share of 20% was abolished.IrelandWe are the operator of the Corrib Gas project (Shell interest 45%),which is currently at an advanced stage of construction. At peakproduction, Corrib is expected to supply a significant proportion of thecountry’s natural gas needs.The NetherlandsShell and ExxonMobil are 50:50 shareholders in NederlandseAardolie Maatschappij B.V. (NAM), the largest hydrocarbon producerin the Netherlands. An important part of NAM’s gas production comesfrom the onshore Groningen gas field, in which the Dutch governmenthas a 40% interest, with NAM holding the remaining 60%. NAM alsohas a 60% interest in the Schoonebeek oil field, which has beenredeveloped using enhanced oil recovery technology. NAM alsooperates a significant number of other onshore gas fields and offshoregas fields in the North Sea.NorwayWe are a partner in more than 20 production licences on theNorwegian continental shelf and are the operator in six of these,including the Ormen Lange gas field (Shell interest 17%) and theDraugen oil field, where we increased our interest to 44.6%. We haveinterests in the Troll, Gjøa, and Kvitebjørn fields, and have furtherinterests in the Valemon field development and various other potentialdevelopment assets.United KingdomWe operate a significant number of our interests on the UKContinental Shelf on behalf of a 50:50 joint venture with ExxonMobil.Most of our UK oil and gas production comes from the North Sea. Wehold various non-operated interests in the Atlantic Margin area,principally in the West of Shetlands area. We have increased ourinterest in the non-operated Schiehallion field to 55%, and in the Berylarea fields, with interests ranging from 25% to 66%.Rest of EuropeShell also has interests in Albania, Austria, Germany, Greece,Hungary, Italy, Slovakia, Spain and Ukraine.ASIA (INCLUDING THE MIDDLE EAST AND RUSSIA)BruneiShell and the Brunei government are 50:50 shareholders in Brunei ShellPetroleum Company Sendirian Berhad (BSP). BSP holds long-term oil andgas concession rights onshore and offshore Brunei, and sells most of itsnatural gas production to Brunei LNG Sendirian Berhad (BLNG, Shellinterest 25%). BLNG was the first LNG plant in Asia-Pacific, and sellsmost of its LNG on long-term contracts to customers in Asia.We are the operator for the Block A concession (Shell interest 53.9%),which is under exploration and development. We have a 35% interestin the Block B concession, where gas and condensate are producedBUSINESS REVIEW

24 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Upstreamfrom the Maharaja Lela Field. In addition, we have a 12.5% interest inexploration Block CA-2 under a PSC.ChinaWe operate the onshore Changbei tight-gas field under a PSC withPetroChina. The PSC was amended in July 2012 for developing tightgas in different geological layers of the same block.Shell and PetroChina have also agreed to appraise, develop andproduce tight gas in the Jinqiu block under a PSC that expires in 2040(Shell interest 49%) and signed a PSC in March 2012 for shale-gasexploration, development and production in the Fushun Yongchuanblock (Shell interest 49%), both in Sichuan. Shell and PetroChina arealso assessing opportunities in coalbed methane in the Ordos Basin.In 2012, Shell became a party to the Zitong PSC for tight gasexploration, development and production in Sichuan (Shell interest44.1%).Shell has agreed with Chinese National Offshore Oil Corporation toappraise and potentially develop two offshore oil and gas blocks in theYinggehai Basin under a PSC signed in July 2012 (Shell interest 49%).IndonesiaWe have a 30% participating interest in the offshore Masela blockwhere INPEX Masela is the operator. The Masela block contains theAbadi gas field. The operator has currently selected a floating LNG(FLNG) concept for the field’s first development phase.IranShell transactions in Iran are disclosed in accordance with Section 13(r)of the US Securities Exchange Act of 1934. See page 51.IraqWe have a 45% interest in the Majnoon oil field that we operate undera technical service contract that expires in 2030. The other Majnoonshareholders are PETRONAS (30%) and the Iraqi government (25%),which is represented by the Missan Oil Company. Majnoon is locatedin southern Iraq and is one of the world’s largest oil fields. The firstphase of the development is planned to bring production toapproximately 175 thousand b/d from the level of 45 thousand b/dwhen the contract entered into effect in March 2010. We also have a15% interest in the West Qurna 1 field. At the end of 2012,production was approximately 460 thousand b/d. According to theprovisions of both contracts, Shell’s equity entitlement volumes will belower than the Shell interest implies.In 2012, Shell continued to work in establishing Basrah GasCompany, a joint venture between Shell (44%), South Gas Company(51%) and Mitsubishi Corporation (5%). The Basrah Gas Companywill gather, treat and process raw gas produced from the Rumaila,West Qurna 1 and Zubair fields. Currently, an estimated 700 millionscf/d of gas is flared because of a lack of infrastructure to collect andprocess it. The processed natural gas and associated products, such ascondensate and liquefied petroleum gas (LPG), will be sold primarilyto the domestic market with the potential to export any surplus.KazakhstanWe have a 16.8% interest in the offshore Kashagan field, where theNorth Caspian Operating Company is the operator. This shallowwaterfield covers an area of approximately 3,400 square kilometres.Phase 1 development of the field is expected to lead to plateauproduction of approximately 300 thousand boe/d, increasing furtherwith additional phases of development. NC Production OperationsCompany, a joint venture between Shell and KazMunayGas, willmanage production operations. First production is expected in 2013.We have an interest of 55% in the Pearls PSC, covering an area ofapproximately 900 square kilometres located in the Kazakh sector ofthe Caspian Sea that includes two oil discoveries (Auezov andKhazar) and several exploration prospects.MalaysiaWe produce oil and gas located offshore Sabah and Sarawak under19 PSCs, in which our interests range from 30% to 85%.In Sabah we operate four producing offshore oil fields with interestsranging from 50% to 80% as part of the 2011 North Sabah EOR PSCand SB1 PSC (the latter expired at the end of December 2012). Wealso have additional interests ranging from 30% to 50% in PSCs forthe exploration and development of five deep-water blocks. Theseinclude the Gumusut-Kakap deep-water field (Shell interest 33%) andthe Malikai field (Shell interest 35%). Both these fields are currentlybeing developed with Shell as the operator. We started productionfrom Gumusut-Kakap in November 2012, ahead of completion of afloating production system. We did this by connecting two wells to theKikeh production facility, which is operated by Murphy Sabah Oil.We also have a 21% interest in the Siakap North-Petai field and a30% interest in the Kebabangan field.In Sarawak we are the operator of 20 gas fields with interests rangingfrom 37.5% to 70%. Nearly all of the gas produced is supplied toMalaysia LNG in Bintulu where we have a 15% interest in each of theDua and Tiga LNG plants. We also have a 40% interest in the 2011Baram Delta EOR PSC and a 50% interest in Block SK-307.In 2012, we signed five new exploration PSCs: Deepwater Block 2B,SK318, SK319 and SK408, all offshore Sarawak, and SB311,offshore Sabah.We also operate a GTL plant (Shell interest 72%), which is adjacent tothe Malaysia LNG facilities in Bintulu. Using Shell technology, theplant converts natural gas into high-quality middle distillates, drillingfluids, waxes and other speciality products.OmanWe have a 34% interest in Petroleum Development Oman (PDO), theoperator of an oil concession expiring in 2044. In 2012, productionbegan at its Harweel Enhanced Oil Recovery project, which isexpected to produce approximately 30 thousand boe/d at peakproduction.We are also participating in the development of the Mukhaizna oilfield (Shell interest 17%) where steam flooding, an enhanced oilrecovery method, is being applied on a large scale.We have a 30% interest in Oman LNG, which mainly supplies Asianmarkets under long-term contracts. We also have an 11% indirectinterest in Qalhat LNG, another Oman-based LNG facility.QatarPearl in Qatar is the world’s largest GTL plant. Shell operates the plantunder a development and production-sharing contract with thegovernment of Qatar. The fully integrated facility includes production,transport and processing of approximately 1.6 billion scf/d ofwell-head gas from Qatar’s North Field with installed capacity ofabout 140 thousand boe/d of high-quality liquid hydrocarbonproducts and 120 thousand boe/d of NGL and ethane. Ramp-up ofthe project was completed in the fourth quarter of 2012. The plant

eports.shell.com Shell Annual Report and Form 20-F 2012 25Business Review > Upstreamdelivered its 100th cargo in mid-December and produced GTL Jet fuel,with its first commercial market introduction in January 2013.We have a 30% interest in Qatargas 4, which comprises integratedfacilities to produce approximately 1.4 billion scf/d of natural gasfrom Qatar’s North Field, an onshore gas-processing facility and anLNG train with a collective production capacity of 7.8 mtpa of LNGand 70 thousand boe/d of NGL. The train delivered its first LNG in2011 and has been operating at full capacity in 2012. The LNG isshipped mainly to markets in North America, China, Europe and theUnited Arab Emirates.We are the operator of Block D under the terms of an exploration andproduction-sharing contract with Qatar Petroleum, representing thenational government. We have a 75% interest, with PetroChinaholding the remaining 25% interest.RussiaWe have a 27.5% interest in Sakhalin-2, one of the world’s largestintegrated oil and gas projects. Located in a subarctic environment,the project produced approximately 335 thousand boe/d in 2012.Following optimisation of the LNG plant, production from its two trainsexceeded 10 million tonnes in 2012.We have a 50% interest in the Salym fields in western Siberia, whereproduction was approximately 155 thousand boe/d during 2012.We also have a 100% interest in four exploration and productionlicences. They are for the East Talotinskiy area in the NenetsAutonomous District, the Barun-Yustinsky block in Kalmykia and theArkatoitsky and the Lenzitsky blocks in the Yamalo NenetsAutonomous District. We also have an exploration licence in theNorth-Vorkutinsky area in the Komi Republic.United Arab EmiratesIn Abu Dhabi we hold a concessionary interest of 9.5% in the oil andgas operations run by Abu Dhabi Company for Onshore OilOperations (ADCO). The licence expires in 2014. We also have a15% interest in the licence of Abu Dhabi Gas Industries Limited(GASCO), which expires in 2028. GASCO exports propane, butaneand heavier-liquid hydrocarbons that it extracts from the wet naturalgas associated with the oil produced by ADCO.Rest of Asia (including the Middle East and Russia)Shell also has interests in India, Japan, Jordan, Kuwait, thePhilippines, Saudi Arabia, Singapore, South Korea and Turkey. Wesuspended all exploration and production activities in Syria inDecember 2011.OCEANIAWe have a 50% interest in Arrow Energy Holdings Pty Limited(Arrow), a Queensland-based joint venture with PetroChina. Arrowowns coalbed methane assets, a domestic power business and the sitefor a proposed LNG plant on Curtis Island, near Gladstone. In January2012, Arrow completed the acquisition of coalbed methane companyBow Energy Ltd (Shell-share consideration $0.3 billion).We have a 25% interest in the Gorgon LNG project, which involvesthe development of some of the largest gas discoveries to date inAustralia, beginning with the offshore Gorgon (Shell interest 25%) andJansz-lo (Shell interest approximately 20%) fields. It includes theconstruction of a 15.3 mtpa LNG plant on Barrow Island.We are the operator of a permit in the Browse Basin in which twoseparate gas fields were found: Prelude in 2007, and Concerto in2009. We are developing these fields on the basis of our innovativeFLNG technology. The Prelude FLNG project is expected to produceabout 110 thousand boe/d of natural gas and NGL, deliveringapproximately 3.6 mtpa of LNG, 1.3 mtpa of condensate and 0.4 mtpaof LPG. During 2012, we commenced construction of the Prelude FLNGproject and completed the sale of a 17.5% interest to INPEX and a 10%interest to KOGAS. We also completed the sale of a 5% interest to CPCCorporation in the first quarter of 2013, reducing our interest to 67.5%.We formed a joint venture to operate the Crux gas and condensatefield (Shell interest 82%). We also operate the AC/P41 block (Shellinterest 75%).We are also a partner in the Browse joint ventures covering theBrecknock, Calliance and Torosa gas fields. During 2012, weincreased our interest in the West Browse joint venture to 35% and inthe East Browse joint venture to 25%. The Browse resources are beingassessed for development on the basis of an LNG export project.In the Timor Sea we have a 26.6% interest in the Sunrise gas field. Thejoint-venture partners have selected FLNG as the preferreddevelopment concept for Sunrise. The development is subject toapproval from both the Australian and Timor-Leste governments.Shell is a partner in both Shell-operated and non-operated explorationjoint ventures in multiple basins including the Bonaparte, ExmouthPlateau, Greater Gorgon, Outer Canning and South Exmouth.We also have a 6.4% interest in the Wheatstone LNG project, whichincludes the construction of two LNG trains with a combined capacityof 8.9 mtpa.Rest of OceaniaShell also has interests in New Zealand.BUSINESS REVIEWAustraliaWe have interests in offshore production and exploration licences in theNorth West Shelf (NWS) and Greater Gorgon areas of the CarnarvonBasin, as well as in the Browse Basin and Timor Sea. Some of theseinterests are held directly and others indirectly through a shareholding ofapproximately 23% in Woodside Petroleum Ltd (Woodside). All interestsin Australian assets quoted below are direct interests.Woodside is the operator of the Pluto LNG Project which produced itsfirst LNG in 2012. Woodside is also the operator on behalf of six jointventureparticipants of the NWS gas, condensate and oil fields, whichproduced more than 470 thousand boe/d in 2012. Shell providestechnical support for the NWS development.AFRICANigeriaShell-share production in Nigeria was approximately 365 thousandboe/d in 2012 compared with approximately 385 thousand boe/d in2011. Security, crude oil theft and flooding in the Niger Delta weresignificant challenges in 2012.Onshore The Shell Petroleum Development Company of Nigeria Ltd(SPDC) is the operator of a joint venture (Shell interest 30%) that holdsmore than 25 Niger Delta onshore oil mining leases (OMLs), whichexpire in 2019. To provide funding, Modified Carry Agreements arein place for certain key projects and a bridge loan was drawn downby the Nigerian National Petroleum Company (NNPC) in 2010. TheModified Carry Agreements are being reimbursed, and in

26 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > UpstreamDecember 2012 NNPC repaid the bridge loan with interest. Newfinancing agreements with NNPC are under discussion and areexpected to be put in place during 2013.We have a 30% interest in the Gbaran-Ubie integrated oil and gasproject in Bayelsa State, which delivered 0.9 billion scf/d of gas in2012. Gas from Gbaran-Ubie is delivered to Nigeria LNG Ltd (NLNG)for export. In October 2012, SPDC declared force majeure on gassupplies, as a result of a security incident on the Bomu-Bonny trunklineand rain flooding. This force majeure was lifted the following monthand the impact on SPDC gas production was very limited.In 2012, we sold our 30% interests in OMLs 30, 34 and 40 for aconsideration of $1.1 billion.Offshore Our main offshore deep-water activities are carried out by ShellNigeria Exploration and Production Company (Shell interest 100%)which holds interests in three deep-water blocks. We operate two of theblocks, including the Bonga field 120 kilometres offshore. Deep-wateroffshore activities are typically governed through PSCs.SPDC also holds an interest in six shallow-water offshore leases, ofwhich five expired on November 30, 2008. However, SPDC satisfiedall the requirements of the Nigerian Petroleum Act to be entitled to anextension. Currently, the status quo is maintained following a courtorder issued on November 26, 2008. SPDC is pursuing a negotiatedsolution with the federal government of Nigeria. Production from theEA field, in one of the disputed leases, continued throughout 2012.LNG Shell has a 25.6% interest in NLNG, which operates six LNGtrains with a total capacity of 22.0 mtpa. NLNG continued productionnear full capacity during 2012.Rest of AfricaShell also has interests in Benin, Egypt, Gabon, Ghana, Libya, SouthAfrica, Tanzania and Tunisia.NORTH AMERICACanadaWe hold more than 2,200 mineral leases in Canada, mainly inAlberta and British Columbia. We produce and market natural gas,NGL, synthetic crude oil and bitumen. In addition, we hold significantexploration acreage offshore. Bitumen is a very heavy crude oilproduced through conventional methods as well as through enhancedoil-recovery methods. Synthetic crude oil is produced by miningbitumen-saturated sands, extracting the bitumen from the sands, andtransporting it to a processing facility where hydrogen is added toproduce a wide range of feedstocks for refineries.Gas and liquids-rich shale We hold rights to more than 10,000square kilometres of conventional gas, tight gas and liquids-rich shaleacreage. We own and operate four natural gas processing andsulphur-extraction plants in southern and south-central Alberta. Wecontinued to develop conventional gas, tight gas and liquids-rich shalefields in west-central Alberta and east-central British Columbia during2012, through drilling programmes and investment in infrastructurefacilitating new production.Synthetic crude oil We operate the Athabasca Oil Sands Project(AOSP) in north-east Alberta as part of a joint venture (Shell interest60%). The AOSP’s bitumen production capacity is 255 thousandboe/d. The bitumen is transported by pipeline for processing at theScotford Upgrader, which is operated by Shell and located in theEdmonton area, Alberta. The first phase of the AOSP debottleneckingproject comes online in 2013, and is expected to add an additional10 thousand boe/d at peak production. We also took the finalinvestment decision on the Quest carbon capture and storage project(Shell interest 60%), which is expected to capture and permanentlystore more than 1 mtpa of CO 2 from the Scotford Upgrader.Shell also holds a number of other minable oil sands leases in theAthabasca region with expiry dates ranging from 2018 to 2025. Bycompleting a certain minimum level of development prior to theirexpiry, leases may be extended.Bitumen We produce and market bitumen in the Peace River area ofAlberta, and have a steam-assisted gravity drainage project inoperation near Cold Lake, Alberta. Additional heavy oil resources andadvanced recovery technologies are under evaluation onapproximately 1,200 square kilometres in the Grosmont oil sandsarea, also in northern Alberta.Offshore We have a 31.3% interest in the Sable Offshore Energyproject, a natural-gas complex offshore eastern Canada. We also havea 100% operating interest in frontier deep-water acreage offshore NovaScotia, a 20% non-operating interest in an exploration asset off the eastcoast of Newfoundland, and a number of exploration licences in theMackenzie Delta in the Northwest Territories.United States of AmericaWe produce oil and gas in the Gulf of Mexico, heavy oil in Californiaand primarily tight gas and associated liquid hydrocarbons inLouisiana, Pennsylvania, Texas and Wyoming. The majority of our oiland gas production interests are acquired under leases granted by theowner of the minerals underlying the relevant acreage (including manyleases for federal onshore and offshore tracts). Such leases usually runon an initial fixed term that is automatically extended by theestablishment of production for as long as production continues,subject to compliance with the terms of the lease (including, in the caseof federal leases, extensive regulations imposed by federal law).Gulf of Mexico The Gulf of Mexico is the major production area in theUSA, accounting for almost 50% of Shell’s oil and gas production inthe country. We have approximately 420 federal offshore leases inthe Gulf of Mexico, about one-fifth of which are producing. Our shareof production in the Gulf of Mexico averaged almost 190 thousandboe/d in 2012. Key producing assets are Auger, Brutus, Enchilada,Mars, NaKika, Perdido, Ram-Powell and Ursa.Deferments resulting from the 2010 drilling moratorium, delivery ofnew-build drilling rigs and new regulatory requirements continued toaffect the operational flexibility and delivery timing of our Gulf ofMexico activities in 2012. While the new regulatory regime hasresulted in a longer and more complex permitting process, Shellcontinues to meet all deep-water regulatory permitting andenvironmental assessment requirements. Despite these challenges, wecontinued to grow our presence in the Gulf of Mexico, with theaddition of two drilling rigs to our contracted offshore fleet in 2012.We also secured 24 blocks in the 2012 central lease sale for a sum of$400 million.Onshore We hold more than 15,000 square kilometres of tight-gasand liquids-rich shale acreage. This includes significant holdings in theMarcellus shale, centred on Pennsylvania in north-east USA, the EagleFord shale formation in south Texas, the Sand Wash and NiobraraShale in north-west Colorado, as well as the Mississippi Line insouth-central Kansas. In 2012, we also acquired approximately2,200 square kilometres of mineral rights, with an additional

eports.shell.com Shell Annual Report and Form 20-F 2012 27Business Review > Upstream300 square kilometres linked to contractual conditions, in theDelaware Permian Basin in west Texas.California We have a 51.8% interest in Aera Energy LLC (Aera),which holds assets in the San Joaquin Valley and Los Angeles Basinareas of southern California. Aera operates more than 15,000 wells,producing approximately 130 thousand boe/d of heavy oil and gas.Alaska We hold more than 410 federal leases for exploration in theBeaufort and Chukchi seas in Alaska. During the 2012 drilling season,we drilled two exploratory wells, one each in the Beaufort andChukchi seas. These wells are known as top holes as they do not godeep enough to reach hydrocarbon reservoirs. After drilling they weresafely capped in accordance with regulatory requirements.Rest of North AmericaShell also has interests in Greenland and Mexico.SOUTH AMERICABrazilWe are the operator of several producing fields offshore Brazil. Theyinclude the Bijupirá and Salema fields (Shell interest 80%) and theBC-10 field (Shell interest 50%). We also operate one offshoreexploration block in the Santos Basin, BMS-54 (Shell interest 80%).We have interests in two offshore exploration blocks in the EspiritoSanto basins, BMES-23 and BMES-27, with a 20% and 17.5% interestrespectively. Shell also operates five blocks in the São Franciscoonshore basin area. In 2012, we divested our 40% interest in theoffshore Block BS-4 in the Santos Basin.BUSINESS REVIEWWe also have an 18% interest in Brazil Companhia de Gas de SãoPaulo (Comgás), a natural gas distribution company in the state of SãoPaulo.French GuianaWe are the operator of an exploration block in the 24,000 squarekilometres deep-water Guyane Maritime Permit (Shell interest 45%).Rest of South AmericaShell also has interests in Argentina, Colombia, Guyana andVenezuela.TRADINGWe market a portion of our share of equity production of LNG andalso trade LNG volumes around the world through our hubs in Dubai,the Netherlands and Singapore. We also market and trade naturalgas, power and emission rights in the Americas and Europe.

28 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > UpstreamSUMMARY OF PROVED OIL AND GAS RESERVES OF SHELL SUBSIDIARIES AND SHELL SHARE OFEQUITY-ACCOUNTED INVESTMENTS [A] (AT DECEMBER 31, 2012) BASED ON AVERAGE PRICES FOR 2012Oil and natural Natural gasTotalgas liquids(million barrels)(thousandmillion scf)Synthetic crude oil(million barrels)Bitumen(million barrels)all products(million boe)[B]Proved developedEurope 448 11,599 – – 2,448Asia 1,277 14,454 – – 3,769Oceania 53 1,424 – – 299Africa 496 1,012 – – 670North AmericaUSA 500 1,674 – – 789Canada 28 872 1,271 18 1,467South America 48 84 – – 62Total proved developed 2,850 31,119 1,271 18 9,504Proved undevelopedEurope 345 2,569 – – 788Asia 429 1,857 – – 749Oceania 121 5,186 – – 1,015Africa 192 1,229 – – 404North AmericaUSA 403 678 – – 520Canada 5 139 492 31 552South America 39 15 – – 42Total proved undeveloped 1,534 11,673 492 31 4,070Total proved developed and undevelopedEurope 793 14,168 – – 3,236Asia 1,706 16,311 – – 4,518Oceania 174 6,610 – – 1,314Africa 688 2,241 – – 1,074North AmericaUSA 903 2,352 – – 1,309Canada 33 1,011 1,763 49 2,019South America 87 99 – – 104Total 4,384 42,792 1,763 49 13,574[A] Includes 18 million boe of reserves attributable to non-controlling interest in Shell subsidiaries.[B] Natural gas volumes are converted to oil equivalent using a factor of 5,800 scf per barrel.

eports.shell.com Shell Annual Report and Form 20-F 2012 29Business Review > UpstreamLOCATION OF OIL AND GAS EXPLORATION AND PRODUCTIONACTIVITIES [A] (AT DECEMBER 31, 2012)Developmentand/orExploration production Shell operator[B]EuropeAlbaniaDenmark Germany Ireland Italy The Netherlands Norway UK Ukraine Asia [C]Brunei China Indonesia Iraq Jordan Kazakhstan Malaysia Oman Philippines Qatar Russia Saudi ArabiaTurkey United Arab Emirates OceaniaAustralia New Zealand AfricaBeninEgypt Gabon Libya Nigeria South Africa TanzaniaTunisia North AmericaUSA Canada Greenland South AmericaArgentina Brazil Colombia French Guiana GuyanaVenezuela[A] Includes equity-accounted investments. Where an equity-accountedinvestment has properties outside its base country, those properties are notshown in this table.[B] In several countries where “Shell operator” is indicated, Shell is theoperator of some but not all exploration and/or production ventures.[C] Shell suspended all exploration and production activities in Syria inDecember 2011.CAPITAL EXPENDITURE ON OIL AND GAS EXPLORATIONAND PRODUCTION ACTIVITIES AND EXPLORATION EXPENSEOF SHELL SUBSIDIARIES BY GEOGRAPHICAL AREA [A] $ MILLION2012 2011 2010Europe 3,175 1,907 2,033Asia 3,412 4,319 3,137Oceania 5,534 3,349 1,804Africa 2,277 1,701 1,629North America – USA 11,344 6,445 9,400North America – Other [B] 3,475 2,913 3,455South America 907 487 373Total 30,124 21,121 21,831[A] Capital expenditure is the cost of acquiring property, plant and equipmentfor exploration and production activities, and – under the successful effortsmethod of accounting for exploration costs – includes exploration drillingcosts capitalised pending determination of commercial reserves. See alsoNote 2 to the “Consolidated Financial Statements” for further information.Exploration expense is the cost of geological and geophysical surveys andof other exploratory work charged to income as incurred. Explorationexpense excludes depreciation and release of cumulative currencytranslation differences.[B] Comprises Canada and Greenland.BUSINESS REVIEW

30 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > UpstreamAverage realised price by geographical areaOIL AND NATURAL GAS LIQUIDS$/BARREL2012 2011 2010ShellsubsidiariesShell share ofequity-accountedinvestmentsShellsubsidiariesShell share ofequity-accountedinvestmentsShellsubsidiariesShell share ofequity-accountedinvestmentsEurope 108.13 104.60 106.77 103.97 73.35 83.24Asia 107.76 67.33 103.73 62.81 76.21 44.27Oceania 91.62 90.14[A] 92.38 99.74[A] 67.90 78.05[A]Africa 112.45 – 111.70 – 79.63 –North America – USA 103.59 110.00 104.93 109.49 76.36 74.27North America – Canada 68.31 – 70.72 – 53.23 –South America 100.01 97.33 100.44 97.76 69.99 63.57Total 107.15 76.01 105.74 73.01 75.74 52.42[A] Includes Shell’s ownership of 23% of Woodside Petroleum Ltd as from April 2012 (previously: 24% as from November 2010; 34% before that date), apublicly listed company on the Australian Securities Exchange. We have limited access to data; accordingly, the numbers are estimated.NATURAL GAS$/THOUSAND SCF2012 2011 2010ShellsubsidiariesShell share ofequity-accountedinvestmentsShellsubsidiariesShell share ofequity-accountedinvestmentsShellsubsidiariesShell share ofequity-accountedinvestmentsEurope 9.48 9.64 9.40 8.58 6.87 6.71Asia 4.81 10.13 4.83 8.37 4.40 6.55Oceania 11.14 9.48[A] 9.95 10.09[A] 8.59 8.79[A]Africa 2.74 – 2.32 – 1.96 –North America – USA 3.17 7.88 4.54 8.91 4.90 7.27North America – Canada 2.36 – 3.64 – 4.09 –South America 2.63 1.04 2.81 0.99 3.79 –Total 5.53 9.81 5.92 8.58 5.28 6.81[A] Includes Shell’s ownership of 23% of Woodside Petroleum Ltd as from April 2012 (previously: 24% as from November 2010; 34% before that date), apublicly listed company on the Australian Securities Exchange. We have limited access to data; accordingly, the numbers are estimated.SYNTHETIC CRUDE OIL$/BARREL2012 2011 2010ShellsubsidiariesShellsubsidiariesShellsubsidiariesNorth America – Canada 81.46 91.32 71.56BITUMEN$/BARREL2012 2011 2010ShellsubsidiariesShellsubsidiariesShellsubsidiariesNorth America – Canada 68.97 76.28 66.00

eports.shell.com Shell Annual Report and Form 20-F 2012 31Business Review > UpstreamAverage production cost by geographical areaOIL, NATURAL GAS LIQUIDS AND NATURAL GAS [A]$/BOE2012 2011 2010ShellsubsidiariesShell share ofequity-accountedinvestmentsShellsubsidiariesShell share ofequity-accountedinvestmentsShellsubsidiariesShell share ofequity-accountedinvestmentsEurope 14.50 3.56 12.17 3.12 10.09 2.78Asia 7.53 4.71 6.92 4.60 6.07 4.68Oceania 9.06 16.97[B] 8.50 14.46[B] 5.85 8.37[B]Africa 9.52 – 8.45 – 7.09 –North America – USA 20.09 18.24 17.91 17.63 12.90 16.47North America – Canada 19.47 – 18.12 – 17.48 –South America 16.36 11.01 12.50 12.25 8.88 25.05Total 12.47 6.05 11.00 5.60 9.10 5.29[A] Natural gas volumes are converted to oil equivalent using a factor of 5,800 scf per barrel.[B] Includes Shell’s ownership of 23% of Woodside Petroleum Ltd as from April 2012 (previously: 24% as from November 2010; 34% before that date), apublicly listed company on the Australian Securities Exchange. We have limited access to data; accordingly, the numbers are estimated.SYNTHETIC CRUDE OIL$/BARREL2012 2011 2010ShellsubsidiariesShellsubsidiariesShellsubsidiariesNorth America – Canada 40.40 46.19 49.83BUSINESS REVIEWBITUMEN$/BARREL2012 2011 2010ShellsubsidiariesShellsubsidiariesShellsubsidiariesNorth America – Canada 24.11 31.81 23.82

32 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > UpstreamOil and gas production (available for sale)CRUDE OIL AND NATURAL GAS LIQUIDS [A]THOUSAND B/D2012 2011 2010ShellsubsidiariesShell share ofequity-accountedinvestmentsShellsubsidiariesShell share ofequity-accountedinvestmentsShellsubsidiariesShell share ofequity-accountedinvestmentsEuropeDenmark 73 – 88 – 98 –Italy 39 – 35 – 33 –Norway 40 – 37 – 48 –UK 60 – 71 – 98 –Other [B] 3 4 3 5 3 5Total Europe 215 4 234 5 280 5AsiaBrunei 2 73 2 76 3 77Malaysia 41 – 40 – 40 –Oman 205 – 200 – 199 –Russia – 104 – 117 – 117United Arab Emirates – 145 – 144 – 135Other [B] 59 23 40 20 29 1Total Asia 307 345 282 357 271 330Total Oceania 27 18 30 18 30 29AfricaGabon 38 – 44 – 34 –Nigeria 240 – 262 – 302 –Other [B] 12 – 20 – 20 –Total Africa 290 – 326 – 356 –North AmericaUSA 155 67 141 70 163 74Other [B] 15 – 18 – 20 –Total North America 170 67 159 70 183 74South AmericaBrazil 34 – 45 – 53 –Other [B] 1 10 1 9 1 7Total South America 35 10 46 9 54 7Total 1,044 444 1,077 459 1,174 445[A] Includes natural gas liquids. Royalty purchases are excluded. Reflects 100% of production attributable to subsidiaries except in respect of PSCs, where thefigures shown represent the entitlement of the subsidiaries concerned under those contracts.[B] Comprises countries where 2012 production was lower than 20 thousand b/d or where specific disclosures are prohibited.

eports.shell.com Shell Annual Report and Form 20-F 2012 33Business Review > UpstreamNATURAL GAS [A]MILLION SCF/D2012 2011 2010ShellsubsidiariesShell share ofequity-accountedinvestmentsShellsubsidiariesShell share ofequity-accountedinvestmentsShellsubsidiariesShell share ofequity-accountedinvestmentsEuropeDenmark 202 – 256 – 328 –Germany 217 – 253 – 267 –The Netherlands – 1,808 – 1,767 – 1,997Norway 713 – 618 – 643 –UK 328 – 403 – 541 –Other [B] 43 – 41 – 38 –Total Europe 1,503 1,808 1,571 1,767 1,817 1,997AsiaBrunei 51 512 52 524 55 497China 131 – 174 – 253 –Malaysia 572 – 763 – 807 –Russia – 374 – 382 – 359Other [B] 795 317 363 246 209 –Total Asia 1,549 1,203 1,352 1,152 1,324 856OceaniaAustralia 352 243 373 167 404 204New Zealand 182 – 175 – 202 –Total Oceania 534 243 548 167 606 204AfricaEgypt 141 – 133 – 137 –Nigeria 740 – 707 – 587 –Total Africa 881 – 840 – 724 –North AmericaUSA 1,062 5 961 6 1,149 4Canada 616 – 570 – 563 –Total North America 1,678 5 1,531 6 1,712 4Total South America 44 1 51 1 61 –Total 6,189 3,260 5,893 3,093 6,244 3,061BUSINESS REVIEW[A] Reflects 100% of production attributable to subsidiaries except in respect of PSCs, where the figures shown represent the entitlement of the companiesconcerned under those contracts.[B] Comprises countries where 2012 production was lower than 115 million scf/d or where specific disclosures are prohibited.SYNTHETIC CRUDE OILTHOUSAND B/D2012 2011 2010ShellsubsidiariesShellsubsidiariesShellsubsidiariesNorth America – Canada 125 115 72BITUMENTHOUSAND B/D2012 2011 2010ShellsubsidiariesShellsubsidiariesShellsubsidiariesNorth America – Canada 20 15 18

34 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > UpstreamLNG and GTL plants at December 31, 2012LNG LIQUEFACTION PLANTS IN OPERATIONLocationShellinterest (%)[A]100% capacity(mtpa)[B]Australia North West Shelf Karratha 21 16.3Australia Pluto 1 Karratha 21 4.3Brunei LNG Lumut 25 7.8Malaysia LNG (Dua and Tiga) Bintulu 15 17.3[C]Nigeria LNG Bonny 26 22.0Oman LNG Sur 30 7.1Qalhat (Oman) LNG Sur 11 3.7Qatargas 4 Ras Laffan 30 7.8Sakhalin LNG Prigorodnoye 27.5 9.6[A] Interest may be held via indirect shareholding.[B] As reported by the operator.[C] Our interests in the Dua and Tiga plants are due to expire in 2015 and 2023 respectively.LNG LIQUEFACTION PLANTS UNDER CONSTRUCTIONLocationShellinterest (%)100% capacity(mtpa)Gorgon Barrow Island 25 15.3Prelude Offshore Australia 72.5[A] 3.6Wheatstone Onslow 6.4 8.9[A] We divested a further 5% interest in Prelude during the first quarter of 2013, reducing our interest to 67.5%.GTL PLANTS IN OPERATIONCountryShellinterest (%)100% capacity(b/d)Bintulu Malaysia 72 14,700Pearl Qatar 100 140,000Equity LNG sales volumesSHELL SHARE OF EQUITY LNG SALES VOLUMESMILLION TONNES2012 2011 2010Australia 3.6 3.1 3.4Brunei 1.7 1.7 1.7Malaysia 2.5 2.4 2.4Nigeria 5.1 5.0 4.5Oman 1.9 2.0 2.0Qatar 2.4 1.7 –Sakhalin 3.0 2.9 2.8Total 20.2 18.8 16.8

eports.shell.com Shell Annual Report and Form 20-F 2012 35Business Review > DownstreamDOWNSTREAMKEY STATISTICS$ MILLION2012 2011 2010Segment earnings [A] 5,350 4,289 2,950Including:Revenue (including inter-segment sales) 424,410 428,646 336,216Share of earnings of equity-accountedinvestments [A] 1,354 1,577 948Production and manufacturing expenses 9,484 10,547 10,592Selling, distribution and administrativeexpenses 12,996 12,920 13,716Depreciation, depletion and amortisation 3,083 4,251 4,254Net capital investment [A] 4,275 4,342 2,358Refinery availability (%) 93 92 92Chemical plant availability (%) 91 89 94Refinery processing intake (thousand b/d) 2,819 2,845 3,197Oil products sales volumes (thousand b/d) 6,235 6,196 6,460Chemicals sales volumes (thousand tonnes) 18,669 18,831 20,653[A] Segment earnings are presented on a current cost of supplies basis. SeeNotes 2 and 4 to the “Consolidated Financial Statements” for furtherinformation.OverviewShell’s Downstream organisation is made up of a number of differentbusiness activities, part of an integrated value chain, that collectivelyturn crude oil into a range of refined products, which are moved andmarketed around the world for domestic, industrial and transport use.The products include gasoline, diesel, heating oil, aviation fuel,marine fuel, lubricants, bitumen, sulphur and liquefied petroleum gas(LPG). In addition, we produce and sell petrochemicals for industrialuse worldwide.Our Refining activities comprise Manufacturing, Supply andDistribution. Marketing includes Retail, Lubricants, Business to Business(B2B) and Alternative Energies. Chemicals has dedicatedmanufacturing and marketing units of its own. We also trade crude oil,oil products and petrochemicals, primarily to optimise feedstock forManufacturing and Chemicals and to supply our Marketingbusinesses.Downstream earnings are presented on a current cost of supplies basis(CCS earnings). On this basis, the purchase price of the volumes soldduring a period is based on the current cost of supplies during thesame period, after making allowance for the tax effect. CCS earningstherefore exclude the effect of changes in the oil price on inventoryvaluation. Accordingly, when oil prices increase during the period,CCS earnings are likely to be lower than earnings calculated on afirst-in first-out basis (FIFO). Similarly, in a period with declining oilprices, CCS earnings are likely to be higher than earnings calculatedon a FIFO basis. This explains why 2012 CCS earnings were$463 million higher than earnings calculated on a FIFO basis (2011:$2,355 million lower; 2010: $1,498 million lower).Business conditionsThe industrial landscape in 2012 reflected weaker economic growthin several regions, which reduced demand. Even so, refining marginswere higher in 2012 compared with 2011 in key refining hubs,except Asia. Chemical margins in Europe and Asia were lower than in2011 as a result of weak macroeconomic conditions, although USethane cracker margins rose significantly due to the wide pricedifferential between crude oil and natural gas, and improvedmarketing margins.Earnings 2012-2011Segment earnings in 2012 were $5,350 million, 25% higher than in2011. This increase reflected a return to profitability in Refining,although marginal, as a result of higher realised refining margins andbetter refinery availability that were partly offset by lower Chemicalsearnings. Trading contributions were lower in 2012 than in 2011,while Marketing contributions were broadly unchanged. Both activitiescontinued to contribute significantly to Downstream earnings.Realised refining margins recovered strongly from their low level at theend of 2011, and improved across all regions apart from Asia.Refinery intake volumes were 1% lower compared with 2011.However, when portfolio impacts are excluded, refinery intakevolumes were 4% higher than in 2011. Refinery availability increasedto 93% compared with 92% in 2011.Chemicals earnings were lower, mainly as a result of the globaleconomic slowdown, supply constraints of favourable feedstocks in theUSA, and the impact of hurricane Isaac on operations. Chemicalssales volumes were 1% lower compared with 2011, as reductions inEuropean manufacturing capacity and rationalisation of the contractportfolio were largely offset by improved operating performance.Chemical plant availability increased to 91% compared with 89% in2011.Oil products sales volumes were 1% higher compared with 2011.Lower marketing volumes, mainly as a result of portfolio divestments,were more than offset by higher trading volumes. Excluding the impactof divestments and the effect of the formation of the Raízen biofueljoint venture, oil products sales volumes were 3% higher comparedwith 2011.Overall, operating expenses decreased in 2012 compared with2011. Production and manufacturing expenses declined, driven bymanufacturing divestments, cost reduction initiatives and favourablecurrency exchange rate effects. Selling, distribution and administrativeexpenses were broadly unchanged; cost reductions, portfoliodivestments and favourable currency exchange rate effects were offsetby spending related to higher volumes, and growth-stimulatingprogrammes.Earnings in 2012 included a net gain of $39 million. There were netgains on divestments and a tax credit, partly offset by legal andenvironmental provisions. The divestments relate to a number of retailsites in Canada, LPG businesses in Malaysia and the Philippines, aswell as the continuation of the divestment of our Downstream activitiesin Africa.Earnings in 2011 included a net gain of $15 million. There was again from the fair-value accounting of commodity derivatives, a gainarising from the formation of the Raízen joint venture, a net gain ondivestments and a tax credit. These gains were significantly offset bycharges related to impairments, redundancy, decommissioning andlegal provisions. The 2011 divestments included the sale of ourStanlow refinery in the UK, the majority of our Downstream activities inseven African countries, our Downstream activities in Chile andadditional non-core business exits.Earnings 2011-2010Segment earnings in 2011, which included a net gain of $15 millionas described above, were $4,289 million, 45% higher than in 2010.Earnings in 2010 included a net charge of $923 million. Impairmentcharges were partly offset by a gain related to the fair-valueaccounting of commodity derivatives, gains from divestments and aBUSINESS REVIEW

36 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Downstreamgain from the sale of land holdings associated with the former ShellHaven refinery in the UK.All gains and charges identified above relate to items that individuallyexceed $50 million. The following comments relate to earnings afterexcluding the net gain of $15 million from the 2011 results and the netcharge of $923 million from the 2010 results.Downstream earnings increased in 2011 compared with 2010,supported by improved realised unit marketing margins in mostbusinesses, although oil products sales volumes declined, mainly as aresult of portfolio divestments and the effects of the formation of theRaízen joint venture. Chemicals reported record earnings in 2011 asthe market environment was favourable during most of the year,resulting in higher realised margins, partly offset by the impact ofunplanned operational events on Chemicals sales volumes. Realisedrefining margins were in line with 2010 until the fourth quarter, whenmargins declined significantly as global market conditionsdeteriorated. As a result, Refining reported a larger loss in 2011 thanin 2010. This loss was largely offset by increased contributions fromtrading activities due to higher market volatility and greater arbitrageopportunities relative to 2010.Net capital investmentNet capital investment was $4.3 billion in both 2012 and 2011.Capital investment was $5.5 billion in 2012, of which $3.2 billionwas in Refining and Chemicals, and $2.3 billion was in Marketing.Approximately 56% of our 2012 capital investment was used tomaintain the integrity and performance of our asset base.In 2011, capital investment was $7.5 billion, of which $3.3 billionwas in Refining and Chemicals, and $4.2 billion was in Marketing. Ofthe $4.2 billion in Marketing, we invested $1.7 billion in Raízen and$0.4 billion in the acquisition of 253 retail stations in the UK.Divestment proceeds were $1.2 billion in 2012 compared with$3.2 billion in 2011. The planned asset divestment programme torefocus our Downstream portfolio is now mostly complete.Portfolio actionsIn Refining, Shell acquired the remaining outstanding shares in GasnorAS, a market leader in Norway, that supplies LNG as a transport fuelto industrial and marine customers.In Australia refining operations at the 79 thousand b/d Clyde refineryceased. The Clyde refinery and the Gore Bay terminal are in theprocess of being converted into a fuel import facility.In Marketing, Shell agreed to acquire Neste Oil Corporation’s networkof 105 retail sites in Poland.Shell completed the sale of the majority of its shareholding indownstream activities in Botswana, Burkina Faso, Côte d’Ivoire,Guinea, Kenya and Namibia, whilst downstream activities inTanzania were discontinued. The agreements form part of thedivestment of Shell’s shareholding in most of its downstream activitiesin Africa as announced in 2011. Shell continues to divest non-strategicDownstream positions. Divestments included retail stations inNorth America and most of our LPG activities in Asia-Pacific.Business and propertyREFININGManufacturingWe have interests in more than 30 refineries worldwide with thecapacity to process approximately 3.4 million barrels of crude oil perday. Approximately 40% of our refining capacity is in Europe andAfrica, 35% in the Americas and 25% in Asia-Pacific. The Port Arthurrefinery expansion project in Texas, USA, owned by MotivaEnterprises (Shell interest 50%), restarted operations in early 2013,following operational issues in 2012. The expansion brings anadditional 320 thousand b/d of capacity online in the US Gulf Coastregion (increasing the refinery’s total capacity to 620 thousand b/d).Supply and DistributionWith more than 1,500 storage tanks and approximately 150distribution facilities in approximately 25 countries, our Supply andDistribution infrastructure is well positioned for making deliveriesthroughout the world. Deliveries include feedstock for our refineries aswell as finished products for our Marketing businesses and customersworldwide.MARKETINGRetailWe have about 44,000 service stations in more than 70 countries andmore than 100 years’ experience in fuel development. In recent years,we have concentrated on developing differentiated fuels with specialformulations designed to clean engines and improve performance. Wesell such fuels under the Shell V-Power brand in more than 60countries.LubricantsAcross approximately 100 countries we make, market and selltechnically advanced lubricants not only for passenger cars, trucksand coaches but also for industrial machinery in manufacturing,mining, power generation, agriculture and construction.Our strong competitive positioning was highlighted by a number ofleading market research firms. The tenth annual Kline & Companyreport on the global lubricants sector (Global Lubricants Industry2011: Market Analysis and Assessment) confirmed that Shellmaintained its volume and branded leadership position during 2011with a 13% market share.Business to BusinessOur Business to Business (B2B) activities sell fuels, speciality productsand services to a broad range of commercial customers.Shell Aviation provides fuel for approximately 7,000 aircraft everyday at more than 800 airports in more than 35 countries. On averagewe refuel a plane every 12 seconds.Shell Gas (LPG) provides liquefied petroleum gas and related servicesto retail, commercial and industrial customers for cooking, heating,lighting and transport.ShellCommercialFuelsprovides transport, industrial and heating fuelsin 20 countries. Our wide range of products, from reliable main-gradefuels with standard quality to premium products, can offer tangiblebenefits. These include fuel economy, enhanced equipmentperformance, such as longer life and lower maintenance costs, andenvironmental benefits, such as reduced emissions.

eports.shell.com Shell Annual Report and Form 20-F 2012 37Business Review > DownstreamShell Bitumen supplies on average 11,000 tonnes of products everyday to 1,600 customers worldwide and invests in technology researchand development to create innovative, award-winning new products.Shell Sulphur Solutions has developed a dedicated sulphur business tomanage the complete value chain of sulphur, from refining tomarketing. The business provides sulphur for industries such as miningand textiles and also develops new products which incorporatesulphur, for example in road surfaces, fertilisers and concrete.Our marine activities provide lubricants, fuels and related technicalservices to the shipping and boating industries. We supply more than100 grades of lubricants and 20 different types of fuel for marinevessels powered by diesel, steam-turbine and gas-turbine engines. Weserve more than 15,000 vessels worldwide, ranging from large oceangoingtankers to small fishing boats.Alternative EnergiesWe investigate alternative energy technologies with a long-termaspiration to develop them into business opportunities. We were oneof the first companies to invest in advanced biofuels. Our Raízen jointventure in Brazil produces sustainable ethanol from sugar, andmanages a retail network. With an annual production capacity ofmore than 2 billion litres, it is one of the largest biofuel producers inthe world. We also continue to research and explore the potential ofhydrogen as an alternative energy source for the longer term.Downstream business activities with Iran,Sudan and SyriaIRANShell transactions in Iran are disclosed in accordance withSection 13(r) of the US Securities Exchange Act of 1934. Seepage 51.SUDANShell-controlled companies ceased all operational activities in Sudanin 2008. We have, however, continued soil remediation related toearlier operations in the country.SYRIAShell-controlled companies are in compliance with all EU and USsanctions. Shell-controlled companies continue to supply limitedquantities of polyols via a Netherlands-based distributor to privatesector customers in Syria. Polyols are commonly used for theproduction of foam in mattresses and soft furnishings.Downstream data tablesThe tables below reflect Shell subsidiaries, the 50% Shell interest inMotiva in the USA and instances where Shell owns the crude orfeedstock processed by a refinery. Other equity-accounted investmentsare only included where explicitly stated.BUSINESS REVIEWShell CO 2 is responsible for coordinating and driving CO 2management activities across all our businesses.CHEMICALSManufacturingOur plants produce a range of base chemicals, including ethylene,propylene and aromatics, as well as intermediate chemicals, such asstyrene monomer, propylene oxide, solvents, detergent alcohols,ethylene oxide and ethylene glycol. We have the capacity to producenearly 6 mtpa of ethylene.MarketingWe sell petrochemicals to about 1,000 major industrial customersworldwide, with the top 20 customers accounting for more than 40%of our revenue. Our Chemicals business is in the top 10 of chemicalsenterprises in the world by revenue. Its products are used to makenumerous everyday items, from clothing and cars, to bubble bath andbicycle helmets.OIL PRODUCTS – COST OF CRUDE OILPROCESSED OR CONSUMED [A]$ PER BARREL2012 2011 2010Total 106.82 104.71 77.22[A] Includes Upstream margin on crude oil supplied by Shell subsidiaries andequity-accounted investment exploration and production companies.CRUDE DISTILLATION CAPACITY [A]THOUSAND B/CALENDAR DAY [B]2012 2011 2010Europe 1,243 1,243 1,501Asia-Pacific 822 861 855Americas 1,212 1,064 1,155Other 83 83 83Total 3,360 3,251 3,594[A] Average operating capacity for the year, excluding mothballed capacity.[B] Calendar day capacity is the maximum sustainable capacity adjusted fornormal unit downtime.TRADINGOur trading activities include the optimisation of our oil value chain,including where necessary the sale or purchase of the excess orshortfall of oil products, as well as trading around the physical flow ofhydrocarbons.We trade in physical and financial contracts, lease storage andtransportation capacities around the globe and manage shippingactivities.ETHYLENE CAPACITY [A]THOUSAND TONNES/YEAR2012 2011 2010Europe 1,659 1,659 1,878Asia-Pacific 1,556 1,556 1,565Americas 2,212 2,212 2,212Other 366 366 366Total 5,793 5,793 6,021[A] Includes the Shell share of equity-accounted investments’ capacityentitlement (offtake rights), which may be different from nominal equityinterest. Nominal capacity is quoted as at December 31.

38 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > DownstreamOIL PRODUCTS – CRUDE OIL PROCESSED [A]THOUSAND B/D2012 2011 2010Europe 1,069 1,058 1,306Asia-Pacific 704 731 729Americas 1,024 985 1,007Other 220 200 222Total 3,017 2,974 3,264[A] Includes natural gas liquids, share of equity-accounted investments andprocessing for others.REFINERY PROCESSING INTAKE [A]THOUSAND B/D2012 2011 2010Crude oil 2,620 2,652 2,932Feedstocks 199 193 265Total 2,819 2,845 3,197Europe 970 1,041 1,314Asia-Pacific 670 666 650Americas 1,117 1,075 1,158Other 62 63 75Total 2,819 2,845 3,197[A] Includes crude oil, natural gas liquids and feedstocks processed in crudedistillation units and in secondary conversion units.REFINERY PROCESSING OUTTURN [A]THOUSAND B/D2012 2011 2010Gasolines 995 993 1,224Kerosines 321 339 354Gas/Diesel oils 996 977 1,074Fuel oil 256 252 315Other 452 385 442Total 3,020 2,946 3,409[A] Excludes “own use” and products acquired for blending purposes.CHEMICALS SALES VOLUMES [A]THOUSAND TONNES2012 2011 2010EuropeBase chemicals 3,771 4,006 4,507First-line derivatives and others 2,626 2,689 2,795Total 6,397 6,695 7,302Asia-PacificBase chemicals 2,209 2,027 2,209First-line derivatives and others 3,053 3,111 3,415Total 5,262 5,138 5,624AmericasBase chemicals 3,336 3,405 3,949First-line derivatives and others 3,145 3,193 3,134Total 6,481 6,598 7,083OtherBase chemicals 379 229 461First-line derivatives and others 150 171 183Total 529 400 644Total product salesBase chemicals 9,695 9,667 11,126First-line derivatives and others 8,974 9,164 9,527Total 18,669 18,831 20,653OIL PRODUCT SALES VOLUMES [A]THOUSAND B/D2012 2011 2010EuropeGasolines 450 467 505Kerosines 234 261 299Gas/Diesel oils 909 876 953Fuel oil 180 227 205Other products 184 192 227Total 1,957 2,023 2,189Asia-PacificGasolines 319 315 308Kerosines 176 164 172Gas/Diesel oils 445 423 370Fuel oil 304 273 301Other products 227 220 224Total 1,471 1,395 1,375AmericasGasolines 1,123 1,136 1,128Kerosines 264 265 270Gas/Diesel oils 528 461 523Fuel oil 89 91 90Other products 233 236 249Total 2,237 2,189 2,260OtherGasolines 184 156 174Kerosines 60 93 86Gas/Diesel oils 230 236 253Fuel oil 64 60 75Other products 32 44 48Total 570 589 636Total product sales [B][C]Gasolines 2,076 2,074 2,115Kerosines 734 783 827Gas/Diesel oils 2,112 1,996 2,099Fuel oil 637 651 671Other products 676 692 748Total 6,235 6,196 6,460[A] Excludes deliveries to other companies under reciprocal sale and purchasearrangements, which are in the nature of exchanges. Sales of condensateand natural gas liquids are included.[B] Certain contracts are held for trading purposes and reported net ratherthan gross. The effect in 2012 was a reduction in oil product sales ofapproximately 856,000 b/d (2011: 925,000 b/d; 2010: 934,000 b/d).[C] Export sales as a percentage of total oil product sales volumes amounted to27.9% in 2012 (2011: 26.0%; 2010: 24.1%).[A] Excludes chemical feedstock trading and by-products.

eports.shell.com Shell Annual Report and Form 20-F 2012 39Business Review > DownstreamREFINERIES IN OPERATION (AT DECEMBER 31, 2012)Thousand barrels/calendar day, 100% capacity[B]ThermalLocationAssetclassShellinterest (%)[A]Crudedistillationcapacitycracking/visbreaking/cokingCatalyticcrackingHydrocrackingEuropeCzech Republic Kralupy[C] 16 59 – 24 –Litvinov[C] 16 101 14 – 30Denmark Fredericia Š 100 63 40 – –Germany Harburg Š 100 108 14 15 –Miro[C] 32 310 65 89 –Rheinland Š 100 327 57 – 79Schwedt[C] 38 220 47 50 –The Netherlands Pernis Š 90 404 45 48 81Norway Mongstad[C] Š 21 205 23 55 –Asia-PacificAustralia Geelong / 100 118 – 38 –Japan Mizue (Toa)[C] Š/ 18 60 23 38 –Yamaguchi[C] / 13 110 – 25 –Yokkaichi[C] Š/ 26 193 – 55 –Malaysia Port Dickson / 51 107 – 39 –Pakistan Karachi[C] 30 43 – – –Philippines Tabangao 67 96 31 – –Singapore Pulau Bukom Š 100 462 63 34 55Turkey Batman[C] 1 23 – – –Izmir[C] 1 217 17 14 18Izmit[C] 1 217 – 13 25Kirikale[C] 1 106 – – 16AmericasArgentina Buenos Aires Š/ 100 100 18 20 –CanadaAlberta Scotford / 100 92 – – 62Ontario Sarnia / 100 71 5 19 9USACalifornia Martinez Š 100 145 42 65 37Louisiana Convent[C] / 50 227 – 82 45Norco[C] 50 229 25 107 34Texas Deer Park Š 50 312 79 63 53Port Arthur[C][D] Š 50 569 138 81 67Washington Puget Sound Š/ 100 137 23 52 –OtherSaudi Arabia Al Jubail[C] Š/ 50 292 62 – 45South Africa Durban[C] / 38 165 23 34 –[A] Shell interest rounded to nearest whole percentage point; Shell share of production capacity may differ.[B] Calendar day capacity is the maximum sustainable capacity adjusted for normal unit downtime.[C] Not operated by Shell.[D] Includes the refinery expansion, whose crude distillation unit was restarted in January 2013 and is in ramp up phase.BUSINESS REVIEW Integrated refinery and chemical complex.Š Refinery complex with cogeneration capacity./ Refinery complex with chemical unit(s).

40 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > DownstreamMAJOR CHEMICAL PLANTS IN OPERATION [A] (AT DECEMBER 31, 2012)Thousand tonnes/year, Shell share capacityLocation EthyleneStyrenemonomerEthyleneglycolHigherolefins[B]AdditionalproductsEuropeGermany Rheinland 272 – – – AThe Netherlands Moerdijk 972 789 155 – A, IUK Mossmorran [C] 415 – – – –Stanlow [C] – – – 330 IAsia-PacificChina Nanhai [C] 475 320 175 – A, I, PJapan Yamaguchi [C] – – – 11 A, ISingapore Jurong Island [D] 281 720 940 – A, I, P, OPulau Bukom 800 – – – A, IAmericasCanada Scotford – 450 450 – A, IUSA Deer Park 836 – – – A, IGeismar – – 375 920 INorco 1,376 – – – AOtherSaudi Arabia Al Jubail [C] 366 400 – – A, OTotal 5,793 2,679 2,095 1,261[A] Includes joint-venture plants, with the exception of the Infineum additives joint ventures.[B] Higher olefins are linear alpha and internal olefins (products range from C6-C2024).[C] Not operated by Shell.[D] Combination of 100% Shell-owned plants and joint ventures (Shell and non-Shell operated).AIPOAromatics, lower olefins.Intermediates.Polyethylene, polypropylene.Other.OTHER CHEMICAL LOCATIONSLocationProductsEuropeGermany Harburg IKarlsruheASchwedtAThe Netherlands Pernis A, I, OAsia-PacificAustralia Geelong A, IJapan Kawasaki A, IYokkaichiAMalaysia Bintulu IPort DicksonAAmericasArgentina Buenos Aires ICanada Sarnia A, IUSA Martinez OMobileAPuget SoundOOtherSouth Africa Durban IA Aromatics, lower olefins.I Intermediates.O Other.

eports.shell.com Shell Annual Report and Form 20-F 2012 41Business Review > CorporateCORPORATEEARNINGS$ MILLION2012 2011 2010Net interest and investment expense (1,001) (624) (309)Foreign exchange gains/(losses) 169 (77) 42Other – including taxation 623 787 358Segment earnings (209) 86 91OverviewThe Corporate segment covers the non-operating activities supportingShell. It includes Shell’s holdings and treasury organisation, itsheadquarters and central functions as well as its self-insuranceactivities. All finance expense and income as well as related taxes areincluded in the Corporate segment earnings rather than in the earningsof the business segments.The holdings and treasury organisation manages many of theCorporate entities and is the point of contact between Shell and theexternal capital markets. It conducts a broad range of transactions –from raising debt instruments to transacting foreign exchange.Treasury centres in London, Singapore and Rio de Janeiro supportthese activities.Headquarters and central functions provide business support in theareas of communications, finance, health, human resources,information technology, legal services, real estate and security. Theyalso provide support for the shareholder-related activities of theCompany. The central functions are supported by business servicecentres located around the world which process transactions, managedata and produce statutory returns, among other services. The majorityof the headquarters and central-function costs are recovered from thebusiness segments. Those costs that are not recovered are retained inCorporate.Shell mainly self-insures its risk exposures. Shell insurance subsidiariesprovide insurance coverage to Shell entities, generally up to$1.15 billion per event and usually limited to Shell’s percentageinterest in the relevant entity. The type and extent of the coverageprovided is equal to that which is otherwise commercially available inthe third-party insurance market.Earnings 2012-2010Segment earnings for 2012 were a loss of $209 million, comparedwith a gain of $86 million in 2011 and a gain of $91 million in 2010.Net interest and investment expense increased by $377 millionbetween 2011 and 2012. Interest expense was significantly higher,mostly driven by the liquidity premium associated with our currencyswaps, and an increase in Shell’s share of interest expense fromequity-accounted investments. Further, the amount of interestcapitalised on projects declined overall as major projects came onstream,partly offset by the development of new projects. These effectswere partly offset by higher interest income. In 2011, net interest andinvestment expense increased by $315 million compared with 2010.There was a substantial reduction in the amount of interest capitalisedwith projects coming on-stream, and Shell’s share of interest expensefrom equity-accounted investments was higher due to the debtportfolios of new investments. These effects were partly offset by anincrease in interest income as a result of higher average levels of cashbalances.Foreign exchange gains of $169 million in 2012 were principally dueto the favourable impact of exchange rates on non-functional currencyloans and cash balances in operating units. In 2011, foreignexchange losses of $77 million were principally due to the adverseimpact of exchange rates on these items.Other earnings decreased by $164 million in 2012 compared with2011, mainly because of increased costs partly offset by higher taxcredits. The increase from 2010 to 2011 of $429 million was mainlydue to increased tax credits and reduced costs.BUSINESS REVIEW

42 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Liquidity and capital resourcesLIQUIDITY AND CAPITALRESOURCESWe manage our assets and liabilities with the aim that, across thebusiness cycle, “cash in” (including cash from operations anddivestments) at least equals “cash out” (including capital investment,interest and dividends), while maintaining a strong balance sheet.A key measure of our capital structure management is the proportionof debt to equity. Across the business cycle we aim to manage gearing(net debt to net debt plus total equity) within the range of 0-30%.During 2012, gearing ranged from 8.1% to 13.1% (2011: 10.8% to17.1%). See Note 15 to the “Consolidated Financial Statements”.With respect to the objective of maintaining a strong balance sheet,our priorities for applying our cash are investing for organic andinorganic growth, servicing debt commitments, paying dividends andreturning surplus cash to our shareholders.OverviewThe most significant factors affecting our operating cash flow areearnings and movements in working capital. The main driversimpacting our earnings include: realised prices for crude oil andnatural gas; production levels of crude oil and natural gas; andrefining and marketing margins.Since the contribution of Upstream to earnings is larger than that ofDownstream, changes affecting Upstream – particularly changes inrealised crude oil and natural gas prices and production levels – havethe largest impact on Shell’s operating cash flow. While Upstreambenefits from higher realised crude oil and natural gas prices, the extentof such benefit (and the extent of an impact from a decline in theseprices) depends on: the extent to which contractual arrangements aretied to market prices; the dynamics of production-sharing contracts; theexistence of agreements with governments or national oil companies thathave limited sensitivity to crude oil prices; tax impacts; and the extent towhich changes in commodity prices flow through into operating costs.Changes in benchmark prices of crude oil and natural gas in anyparticular period therefore provide only a broad indicator of changes inUpstream earnings experienced in that period.In Downstream, changes in any one of a range of factors derived fromeither within the industry or the broader economic environment caninfluence margins. The precise impact of any such changes dependson how the oil markets respond to them. The market response isaffected by factors such as: whether the change affects all crude oiltypes or only a specific grade; regional and global crude-oil andrefined-products inventories; and the collective speed of response ofthe industry refiners and product marketers in adjusting theiroperations. As a result, refinery and marketing margins fluctuate fromregion to region and from period to period. Downstream earnings arereported on a current cost of supplies basis, which excludes the effectof changes in the oil price on inventory carrying amounts. However,cash flow from operations is not affected by the reporting basis.is to increase proved reserves and more than offset their decline due toproduction. However, proved reserves and production increases aresubject to a variety of risks and other factors, including: crude oil andnatural gas prices; the uncertainties of exploration; operationalinterruptions; geology; frontier conditions; availability of newtechnology and engineering capacity; availability and cost of skilledor specialist resources; project delays; cost overruns; and fiscal,regulatory and political changes.We have a diverse portfolio of field-development projects andexploration opportunities. This diversity can help to reduce the impactof the political and technical risks in Upstream, including the impact onthe cash flow generated by our operating activities.It is our intention to continue to make selective acquisitions anddivestments as part of active portfolio management that is in line withour strategy and influenced by market opportunities.Statement of cash flowsNet cash from operating activities in 2012 was $46.1 billion, anincrease from $36.8 billion in 2011. This increase mainly reflected aworking capital decrease in 2012, compared with a working capitalincrease in 2011. In 2010, net cash from operating activities was$27.4 billion. The increase in 2011 compared with 2010 mainlyreflected the increase in earnings.Net cash used in investing activities was $28.4 billion in 2012, anincrease from $20.4 billion in 2011. The increase was mainly theresult of higher capital expenditure and investments in equityaccountedinvestments. In 2010, net cash used in investing activitieswas $22.0 billion. The decrease in 2011 compared with 2010 wasmainly the result of higher proceeds from the sale of assets and lowercapital expenditure, partly offset by lower proceeds from the sale ofequity-accounted investments.Net cash used in financing activities in 2012 was $10.6 billion(2011: $18.1 billion; 2010: $1.5 billion). This included payment ofdividends of $7.4 billion (2011: $6.9 billion; 2010: $9.6 billion),interest paid of $1.4 billion (2011: $1.7 billion; 2010: $1.3 billion)and repurchases of shares of $1.5 billion (2011: $1.1 billion; 2010:$nil). Debt issued in 2012 was largely offset by debt repaid (2011:net repayments of debt of $7.1 billion; 2010: net new borrowings of$9.3 billion).Cash and cash equivalents were $18.6 billion at December 31, 2012(2011: $11.3 billion; 2010: $13.4 billion).In the longer term, replacement of proved oil and gas reserves willaffect our ability to maintain or increase production levels inUpstream, which in turn will affect our cash flow and earnings. Wewill need to take measures to maintain or increase production levels infuture periods. These may include: developing new fields and mines;developing and applying new technologies and recovery processes toexisting fields and mines; and making selective acquisitions. Our goal

eports.shell.com Shell Annual Report and Form 20-F 2012 43Business Review > Liquidity and capital resourcesCASH FLOW INFORMATION [A]$ BILLION2012 2011 2010Net cash from operating activities excludingworking capital movementsUpstream 32.9 33.3 24.6Downstream 8.0 8.7 8.1Corporate 1.8 1.2 0.6Total 42.7 43.2 33.3Increase in inventories (1.7) (1.9) (2.9)(Increase)/decrease in accounts receivable 14.1 (10.1) (11.9)Increase/(decrease) in accounts payable andaccrued liabilities (9.0) 5.6 8.9(Increase)/decrease in working capital 3.4 (6.4) (5.9)Net cash from operating activities 46.1 36.8 27.4Net cash used in investing activities (28.4) (20.4) (22.0)Net cash used in financing activities (10.6) (18.1) (1.5)Currency translation differences relating to cashand cash equivalents 0.2 (0.4) (0.2)Increase/(decrease) in cash and cashequivalents 7.3 (2.1) 3.7Cash and cash equivalents at the beginning ofthe year 11.3 13.4 9.7Cash and cash equivalents at the end of the year 18.6 11.3 13.4[A] For the “Consolidated Statement of Cash Flows” see page 102.Financial condition and liquidityOur financial position is strong. In 2012, we generated a return onaverage capital employed (ROACE) of 12.7% (see page 45) and yearendgearing was 9.2% (2011: 13.1%). We returned $11.0 billion to ourshareholders through dividends in 2012. Some of those dividends werepaid out as 103.8 million shares issued to shareholders who had electedto receive new shares instead of cash. To partly offset the dilution createdby the issuance of those shares, 43.7 million shares were repurchasedand cancelled as part of our share buyback programme.The size and scope of our businesses require a robust financial controlframework and effective management of our various risk exposures.Financial turbulence in the eurozone and other international eventscontinue to put significant stress on the business environment in whichwe operate. We are following closely the developments and thechallenges that the eurozone and other markets face, and are takingall reasonable steps to ensure that we are well positioned to deal withunexpected events should they occur.Our treasury and trading operations are highly centralised, and areeffective in controlling credit exposures associated with managing oursubstantial cash, foreign exchange and commodity positions.We diversify our cash investments across a range of financialinstruments and counterparties to avoid concentrating risk in any onetype of investment or country. We carefully monitor our investmentsand adjust them in light of new market information.Exposure to failed financial and trading counterparties was minimal in2012 (see Note 21 to the “Consolidated Financial Statements”).various currencies but primarily in dollars, euros and sterling. Totaldebt increased by $0.6 billion in 2012 to $37.8 billion atDecember 31, 2012. The total debt outstanding (excluding leases) atDecember 31, 2012, will mature as follows: 23% in 2013; 8% in2014; 12% in 2015; 6% in 2016; and 51% in 2017 and beyond.The debt maturing in 2013 is expected to be repaid from acombination of cash balances and cash generated from operations.We also maintain a $5.1 billion credit facility that was undrawn as atDecember 31, 2012.We believe our current working capital is sufficient for presentrequirements. We satisfy our funding and working capitalrequirements from the cash generated by our businesses and throughthe issuance of external debt. Our external debt is principally financedfrom the international debt capital markets through central debtprogrammes consisting of:▪ a $10 billion global commercial paper (CP) programme, exemptfrom registration under section 3 (a)(3) of the US Securities Act of1933, with maturities not exceeding 270 days;▪ a $10 billion CP programme, exempt from registration undersection 4(2) of the US Securities Act of 1933, with maturities notexceeding 397 days;▪ a $25 billion euro medium-term note (EMTN) programme; and▪ an unlimited US universal shelf (US shelf) registration.All CP, EMTN and US shelf issuances have been undertaken by ShellInternational Finance B.V., the issuance company for Shell, and areguaranteed by Royal Dutch Shell plc. Further disclosure on debt isincluded in Note 15 to the “Consolidated Financial Statements”.Certain joint-venture operations are financed separately.In 2012, despite our strong cash position, we took advantage offavourable market conditions, including historically low interest rates,to pre-finance bond maturities in 2013 and issued $4.25 billion oflong-term bonds under the US shelf registration. Periodically, forworking capital purposes, we issued commercial paper (2011: weissued commercial paper, but no long-term bonds).Our $5.1 billion committed credit facility, which is due to expire in2015, and internally available liquidity provide back-up coverage forcommercial paper. Aside from certain borrowings in localsubsidiaries, we do not have any other committed credit facilities. Weconsider additional facilities to be neither necessary nor cost-effectivefor financing purposes, given our size, credit rating and cashgenerativenature.The maturity profile of our outstanding commercial paper is activelymanaged to ensure that the amount of commercial paper maturingwithin 30 days remains consistent with the level of supporting liquidity.While our subsidiaries are subject to restrictions, such as foreignwithholding taxes on the transfer of funds in the form of cashdividends, loans or advances, such restrictions are not expected tohave a material impact on our ability to meet our cash obligations.BUSINESS REVIEWTotal employer contributions to our defined benefit pension plans in2012 were $2.3 billion (2011: $2.3 billion) and are estimated to be$2.5 billion in 2013, reflecting current funding levels. See Notes 3and 18 to the “Consolidated Financial Statements” for furtherinformation.Cash and cash equivalents amounted to $18.6 billion at the end of2012 (2011: $11.3 billion). Cash and cash equivalents are held inThe consolidated unaudited ratio of earnings to fixed charges of Shellfor each of five years ending December 31, 2008-2012, is as follows:RATIO OF EARNINGS TO FIXED CHARGES2012 2011 2010 2009 2008Ratio of earnings to fixedcharges 30.99 35.78 21.75 12.90 26.80

44 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Liquidity and capital resourcesFor the purposes of the above table, earnings consist of pre-tax incomefrom continuing operations (before adjustment for non-controlling interest)plus fixed charges (excluding capitalised interest) less undistributedincome of equity-accounted investments. Fixed charges consist ofexpensed and capitalised interest (excluding accretion expense) plusinterest within rental expenses (for operating leases). Refer to“Exhibit 7.1” regarding the calculation of the ratio of earnings to fixedcharges.CAPITALISATION TABLE$ MILLIONDec 31, 2012 Dec 31, 2011Equity attributable to Royal Dutch Shell plcshareholders 188,494 169,517Current debt 7,833 6,712Non-current debt 29,921 30,463Total debt [A] 37,754 37,175Total capitalisation 226,248 206,692[A] Of total debt, $33.4 billion (2011: $32.7 billion) was unsecured and$4.4 billion (2011: $4.5 billion) was secured. Further disclosure on debt,including the amount guaranteed by Royal Dutch Shell plc, is included inNote 15 to the “Consolidated Financial Statements”.DividendsOur policy is to grow the US dollar dividend through time in line with ourview of Shell’s underlying earnings and cash flow. When setting thedividend, the Board of Directors looks at a range of factors, includingthe macro environment, the current balance sheet and future investmentplans. We have announced an interim dividend in respect of the fourthquarter 2012 of $0.43 per share, a 2.4% increase compared with theUS dollar dividend for the same quarter of 2011. Shareholders have achoice to receive dividends in cash or in shares via our Scrip DividendProgramme. The Board expects that the first quarter 2013 interimdividend will be $0.45 per share, an increase of 4.7% compared withthe US dollar dividend for the same quarter of 2012.Net capital investmentOur net capital investment was $29.8 billion in 2012 (2011:$23.5 billion; 2010: $23.7 billion). Of the total net capitalinvestment, $25.3 billion (2011: $19.1 billion; 2010: $21.2 billion)related to Upstream; $4.3 billion (2011: $4.3 billion; 2010:$2.4 billion) to Downstream; and $0.2 billion (2011: $0.1 billion;2010: $0.1 billion) to Corporate.Our 2012 net capital investment comprised $36.8 billion of capitalinvestment (2011: $31.1 billion; 2010: $30.6 billion) less $7.0 billion ofdivestment proceeds (2011: $7.5 billion; 2010: $6.9 billion)See Note 4 to the “Consolidated Financial Statements” for furtherinformation.Financial frameworkWe manage our businesses to deliver strong cash flows to fundinvestment and growth. Our management decisions are based onassumptions about future oil and gas prices.Repurchases of sharesOn May 22, 2012, the shareholders approved an authority, which willexpire at the end of the 2013 AGM, for the Company to repurchase upto 632 million of its shares. In accordance with a similar authoritygranted at the 2011 AGM, a share buyback programme wascommenced in that year to offset the dilution created by the issuance ofshares under our Scrip Dividend Programme. All of the shares purchasedunder the buyback programme were cancelled. A resolution will beproposed at the 2013 AGM to renew authority for the Company topurchase its own share capital up to specified limits for another year.Shares are also purchased by the employee share ownership trusts (seepage 58), in part through re-investment of dividends received, to meetdelivery commitments under employee share plans. All share purchasesaremadeinopen-markettransactions.The following table provides information on repurchases of shares in2012 and up to February 19, 2013. Purchases in euros and sterling areconverted to dollars using the exchange rate at each transaction date.ISSUER PURCHASES OF EQUITY SECURITIESAshares Bshares AADSsPurchase periodNumberrepurchasedfor employeeshare plansWeightedaverageprice ($)[A]Numberrepurchasedfor employeeshare plansNumberrepurchasedfor cancellation[B]Weightedaverageprice ($)[A]Numberrepurchasedfor employeeshare plansWeightedaverageprice ($)[A]2012January – – – – – 768,737 73.15March 844,295 36.32 – 1,325,366 35.29 187,410 73.91April – – – 6,854,706 34.83 – –May – – – 8,146,667 32.44 – –June 720,984 32.79 2,265,336 11,956,000 33.91 438,085 64.86July – – – 2,446,231 35.27 519,100 68.18August – – – – – 1,211,128 69.84September 681,524 35.43 – – – 168,090 70.85October – – – 2,493,369 35.28 – –November – – – 8,132,813 34.52 – –December 732,278 32.91 2,290,370 2,332,831 35.07 181,367 65.81Total 2012 2,979,081 34.42 4,555,706 43,687,983 34.19 3,473,917 69.752013January – – – – – 928,694 69.05Total 2013 [C] – – – – – 928,694 69.05[A] Average price paid per share includes stamp duty and brokers’ commission.[B] Under the share buyback programme.[C] As at February 19, 2013.

eports.shell.com Shell Annual Report and Form 20-F 2012 45Business Review > Liquidity and capital resourcesContractual obligationsThe table below summarises Shell’s principal contractual obligations atDecember 31, 2012, by expected settlement period. The amountspresented have not been offset by any committed third-party revenuein relation to these obligations.CONTRACTUAL OBLIGATIONS$ BILLIONLessthan1yearBetween1and3yearsBetween3and5years5yearsandlater TotalDebt [A] 7.5 6.4 5.7 12.8 32.4Finance leases [B] 0.7 1.2 1.2 4.4 7.5Operating leases [C] 4.9 7.9 5.9 12.2 30.9Purchase obligations [D] 176.0 92.2 39.4 160.1 467.7Other long-termcontractual liabilities [E] – 0.9 0.5 0.2 1.6Total 189.1 108.6 52.7 189.7 540.1[A] Contractual repayments excluding $4.2 billion of finance leaseobligations. See Note 15 to the “Consolidated Financial Statements”.[B] Includes interest. See Note 15 to the “Consolidated Financial Statements”.[C] See Note 15 to the “Consolidated Financial Statements”.[D] Includes all significant items, including fixed or minimum quantities to bepurchased; fixed, minimum or any agreement to purchase goods andservices that is enforceable, legally binding and specifies variable priceprovisions; and the approximate timing of the purchase.[E] Includes all obligations included in “Trade and other payables” in “Noncurrentliabilities” on the Consolidated Balance Sheet that arecontractually fixed as to timing and amount. In addition to these amounts,Shell has certain obligations that are not contractually fixed as to timingand amount, including contributions to defined benefit pension plans (seeNote 18 to the “Consolidated Financial Statements”) and obligationsassociated with decommissioning and restoration (see Note 19 to the“Consolidated Financial Statements”).The table above excludes interest expense related to debt, which isestimated to be $1.1 billion payable in less than one year,$1.7 billion payable between one and three years, $1.5 billionpayable between three and five years and $5.9 billion payable fiveyears and later. For this purpose, we assume that interest rates withrespect to variable interest rate debt remain constant and that there isno change in the aggregate principal amount of debt other thanrepayment at scheduled maturity as reflected in the table.Guarantees and other off-balance sheetarrangementsGuarantees at December 31, 2012, were $3.3 billion (2011:$3.3 billion). This includes $2.2 billion (2011: $2.2 billion) ofguarantees of debt of equity-accounted investments, for which the largestamount outstanding during 2012 was $2.2 billion (2011: $2.4 billion).Return on average capital employedROACE measures the efficiency of Shell’s utilisation of the capital thatit employs. In this calculation, ROACE is defined as income for theperiod adjusted for after-tax interest expense as a percentage of theaverage capital employed for the period. Capital employed consists oftotal equity, current debt and non-current debt. The tax rate is derivedfrom calculations at the published segment level.CALCULATIONOFRETURNONAVERAGECAPITAL EMPLOYED$ MILLION2012 2011 2010Income for the period 26,840 31,185 20,474Interest expense after tax 938 770 577Income before interest expense 27,778 31,955 21,051Capital employed – opening 208,178 194,112 173,168Capital employed – closing 227,681 208,178 194,112Capital employed – average 217,930 201,145 183,640ROACE 12.7% 15.9% 11.5%In 2012, about 27% of our average capital employed was notgenerating any revenue, which reduced our ROACE by approximately5%. These assets included projects being developed and explorationacreage.Financial information relating to the RoyalDutch Shell Dividend Access TrustThe results of operations and financial position of the Royal Dutch ShellDividend Access Trust (the Trust) are included in the consolidatedresults of operations and financial position of Shell. Certain condensedfinancial information in respect of the Trust is given below. Separatefinancial statements for the Trust are also included in this Report.For the years 2012, 2011 and 2010 the Trust recorded income beforetax of £2,383 million, £2,175 million and £2,863 millionrespectively. In each period this reflected the amount of dividendsreceived on the dividend access share.At December 31, 2012, the Trust had total equity of £nil (2011: £nil;2010: £nil), reflecting cash of £1,202,271 (2011: £997,987; 2010:£774,546) and unclaimed dividends of £1,202,271 (2011:£997,987; 2010: £774,546). The Trust only records a liability for anunclaimed dividend, and a corresponding amount of cash, to theextent that cheques expire, which is one year after their issuance, or tothe extent that they are returned unpresented.BUSINESS REVIEW

46 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Our peopleOUR PEOPLECompetitiveness and innovationOur people are central to our aim of being the world’s mostcompetitive and innovative energy company. We recruit, train andrecompense them according to a people strategy based on threepriorities: assuring sources of talent now and in the future;strengthening leadership and professionalism; and enhancingindividual and organisational performance.Over the course of 2012, Shell employed an average of 87,000people in more than 70 countries. We had a strong externalrecruitment drive to execute our strategy and growth plans for thefuture, hiring approximately 1,200 graduates and 3,500 experiencedprofessionals. The majority of our graduates and experiencedprofessional hires came from technical disciplines.EMPLOYEES BY GEOGRAPHICAL AREA(AVERAGE NUMBERS)THOUSAND2012 2011 2010The Netherlands 8 8 8UK 6 7 7Other 10 10 13Europe 24 25 28Asia, Oceania, Africa 31 33 34USA 20 20 20Other Americas 12 12 15Total 87 90 97Employee communication and involvementTwo-way dialogue between management and staff – directly and,where appropriate, via employee representative bodies – is importantand embedded in our work practices. On a quarterly basis, we briefour staff about Shell’s operational and financial results through variouschannels, including electronic communications from the ChiefExecutive Officer, webcasts, publications and face-to-face gatherings.The Shell People Survey is one of the principal tools used to measureemployee engagement: the degree of affiliation and commitment toShell. It provides insights into employees’ views, and has had aconsistently high response rate. The average employee engagementscore in 2012 was 77% favourable, a three-point increase from 2011.We promote safe reporting of views about our processes andpractices. Our global telephone helpline and website enableemployees to report, confidentially and anonymously, breaches of theShell General Business Principles and Code of Conduct.Diversity and inclusionWe have a culture that embraces diversity and fosters inclusion. Byembedding these principles in our operations, we have a betterunderstanding of the needs of our varied customers, partners andstakeholders throughout the world and can benefit from a wider talentpool. We provide equal opportunity in recruitment, careerdevelopment, promotion, training and reward for all employees,including those with disabilities. We make adjustments in job designand provide appropriate training where possible for any existingemployee who becomes disabled.in the number of senior leadership positions, while the number ofwomen stayed the same. In 42% of the countries where Shellsubsidiaries and equity-accounted investments are based, localnationals filled more than half of the senior leadership positions,compared with 34% of countries in 2011.Employee share plansShell has a number of share plans designed to align employees’interests with Shell’s performance through share ownership. Forinformation on the share-based compensation plans for ExecutiveDirectors, see the “Directors’ Remuneration Report”.PERFORMANCE SHARE PLANThe Performance Share Plan (PSP) was introduced in 2005.ConditionalawardsoftheCompany’ssharesaremadeundertheterms of the PSP to some 15,000 employees each year. The extent towhich the awards vest is determined over a three-year performanceperiod. Half of the award is linked to the key performance indicatorsdescribed on page 8, averaged over the period. For the PSP awardsmade prior to 2010, the other half of the award was linked to therelative total shareholder return over the period compared with four ofour main competitors. For awards made in 2010 and onwards, theother half of the award is linked to a comparison with four of our maincompetitors over the period on the basis of four relative performancemeasures. All shares that vest are increased by an amount equal to thenotional dividends accrued on those shares during the period from theaward date to the vesting date. None of the awards results inbeneficial ownership until the shares are delivered. Also refer toNote 22 to the “Consolidated Financial Statements”.RESTRICTED SHARE PLANUnder the Restricted Share Plan, awards are made on a highlyselective basis to senior staff. Shares are awarded subject to a threeyearretention period. All shares that vest are increased by an amountequal to the notional dividends accrued on those shares during theperiod from the award date to the vesting date.GLOBAL EMPLOYEE SHARE PURCHASE PLANEmployees in 50 countries may participate in the Global EmployeeShare Purchase Plan. This plan enables eligible employees to makecontributionstowardsthepurchaseoftheCompany’ssharesata15%discounttothemarketpriceeitheratthestartorattheendofanannual cycle – whichever date offers the lower market price.UK SHARESAVE SCHEMEEligible employees of participating companies in the UK mayparticipate in the UK Sharesave Scheme. Options are granted over theCompany’s shares at market value on a date normally not more than30 days before the grant date of the option. These options arenormally exercisable after completion of a three-year or five-yearcontractual savings period.UK SHELL ALL EMPLOYEE SHARE OWNERSHIP PLANEligible employees of participating companies in the UK mayparticipate in the Shell All Employee Share Ownership Plan, underwhich monthly contributions from gross pay are made towards thepurchase of the Company’s shares.We actively monitor representation of women and local nationals insenior leadership positions, and have talent-development processes tosupport us in delivering more diverse representation. At the end of2012, the proportion of women in senior leadership positions was16.2%, compared with 16.6% in 2011, because of a small increase

eports.shell.com Shell Annual Report and Form 20-F 2012 47Business Review > Environment and societyENVIRONMENT AND SOCIETYOur success in business depends on our ability to meet a range ofenvironmental and social challenges. We must show we can operatesafely and manage the effect our activities can have on neighbouringcommunities and society as a whole. If we fail to do this, we may incurliabilities or sanctions, lose opportunities to do business, ourreputation as a company may be harmed, and our licence to operatemay be impacted.The Shell General Business Principles include a commitment tosustainable development that involves balancing short- and long-terminterests, and integrating economic, environmental and social aspectsinto our business decisions. We have rigorous standards and a firmgovernance structure in place to help manage potential impacts. Wealso work with communities, business partners, non-governmentalorganisations and other bodies to address potential impacts and sharethe benefits of our operations and projects.Detailed data and information on our 2012 environmental and socialperformance will be published in April 2013 in the Shell SustainabilityReport.SafetySustaining our licence to operate depends on maintaining the safetyand reliability of our operations. We manage safety risk across ourbusinesses through controls and compliance systems combined with asafety-focused culture. Our global standards and operatingprocedures define the controls and physical barriers we require toprevent incidents. For example, our offshore wells are designed with atleast two independent barriers to mitigate the risk of an uncontrolledrelease of hydrocarbons. We regularly inspect, test and maintainthese barriers to ensure they meet our standards.We continue to strengthen the safety culture among our employeesand contractors. We expect everyone working for us to intervene andstop work that may appear to be unsafe. In addition to our ongoingsafety awareness programmes, we hold an annual global safety dayto give workers time to reflect on how to prevent incidents. We expecteveryone working for us to comply with our 12 mandatory Life-SavingRules. If employees break these rules, they will face disciplinary actionup to and including termination of employment. If contractors breakthe Life-Saving Rules, they can be removed from the worksite.Climate changeGrowth in energy demand means that all forms of energy will beneeded over the longer term. With hydrocarbons forecast to providethe bulk of the energy needed over coming decades, policymakers arefocusing on regulations that balance energy demand withenvironmental concerns. The management of emissions of carbondioxide (CO 2 ) will become increasingly important as concerns overclimate change lead to tighter environmental regulation.We already assess potential costs associated with CO 2 emissionswhen evaluating projects. But in the years to come, governments mayimpose a price on CO 2 emissions that all companies will have toincorporate in their investment plans, and may also require companiesto apply technical measures to reduce their CO 2 emissions. This couldresult in higher energy, product and project costs. Currently enacted,proposed and future legislation are also expected to increase the costof doing business. Furthermore, in our own operations, we areworking to understand the potential physical impact of climate changein the future on our facilities and new projects. Shell, together withother energy companies, has been subject to litigation regardingclimate change. We believe these lawsuits are without merit and arenot material to Shell.As energy demand increases and easily accessible oil and gasresources decline, we are developing resources that require moreenergy and require advanced technology to produce. This growthincludes expanding our conventional oil and gas businesses, our oilsands operations in Canada, our gas-to-liquids (GTL) business inQatar, and our global liquefied natural gas (LNG) business. As ourbusinesses grow and production becomes more energy intensive, weexpect there will be an associated increase in the direct CO 2emissions from the Upstream facilities we operate.We are seeking cost-effective ways to manage CO 2 emissions and seepotential business opportunities in developing such solutions. Ourmain contributions to reducing CO 2 emissions are in four areas:supplying more natural gas; supplying more biofuels; progressingcarbon capture and storage (CCS) technologies; and implementingenergy efficiency measures in our operations.Nearly one-third of the world’s CO 2 emissions come from powergeneration. For most countries, using more gas in power generationinstead of coal can make the largest contribution, at the lowest cost, tomeeting their emission reduction objectives this decade. In combinationwith renewables and utilisation of CCS, natural gas is essential forsignificantly lower CO 2 emissions beyond 2020. With Shell’s leadingposition in LNG and new technologies for recovering natural gas fromtight rock formations, we can supply natural gas to replace coal inpower generation.We see biofuels as one of the most practical and commercially viableways to reduce CO 2 emissions from transport fuels in coming years.Our Raízen joint venture in Brazil produces low-carbon biofuel fromsugar cane. We are also investing in research to help develop andcommercialise advanced biofuels.The International Energy Agency has stated that CCS could contributeapproximately 19% of the CO 2 mitigation effort required by 2050. Toadvance CCS technologies, Shell is involved in CCS projects includingthe Quest project in Canada, the Mongstad test centre in Norway, andthe Gorgon CO 2 injection project in Australia. In 2012, we alsosubmitted a proposal for a project in the UK to store CO 2 in a depletedgas reservoir in the North Sea. During this important demonstrationphase, government support is essential, and initiatives such as theUnited Nations’ acceptance of CCS as an offsetting activity under theClean Development Mechanism is a positive step in progressing suchtechnologies.We continue to focus on implementing energy efficiency measures inour operations. Shell has multibillion dollar programmes in place in aneffort to improve the energy efficiency of our operations. These includeour oil and gas production projects, oil refineries and chemical plants.In addition, we work to help our customers conserve energy andreduce their CO 2 emissions, including through the development andsale of advanced fuels and lubricants.The flaring, or burning off, of gas in our Upstream business contributedto our overall greenhouse gas emissions in 2012. The majority of thisflaring takes place at facilities where there is no infrastructure tocapture the gas produced with oil, known as associated gas. Most ofthe continuous flaring takes place in Nigeria, where the securitysituation and lack of partner funding had previously slowed progressBUSINESS REVIEW

48 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Environment and societyon projects to capture associated gas. However, the Shell PetroleumDevelopment Company of Nigeria Ltd (SPDC) made progress inreducing flaring in 2012. Improved security in some areas of theNiger Delta and stable co-funding from our partners meant SPDC wasable to continue its multi-year programme to install new gas-gatheringfacilities and repair existing facilities damaged during the militantcrisis of 2006 to 2009. SPDC is working on projects to further reduceflaring. Progress will depend on continued partner support, the localsecurity conditions and the development of an effective market for gasin Nigeria.We expect gas flaring from our Majnoon operations in Iraq to rise incoming years as oil production increases while we evaluate with ourpartners the most effective way to capture the associated gas. In thesouth of Iraq we set up a joint venture to capture the associated gascurrently being flared from non-operated fields in Basrah province.SpillsLarge spills of crude oil, oil products and chemicals associated withour operations can result in major clean-up costs as well as fines andother damages. They can also affect our licence to operate and harmour reputation. We have clear requirements and procedures designedto prevent spills, and multibillion dollar programmes are underway tomaintain or improve our facilities and pipelines.Shell business units are responsible for organising and executing oilspill responses in line with Shell guidelines as well as with nationallegislation. All our offshore installations have plans in place to respondto a spill. These plans detail response strategies and techniques,available equipment, and trained personnel and contacts. We areable to call upon significant resources such as containment booms,collection vessels and aircraft. We are also able to draw upon thecontracted services of oil spill response organisations, if required. Weconduct regular exercises to ensure these plans remain effective.Shell is a founding member of the Marine Well ContainmentCompany, a non-profit industry consortium to provide a containmentresponse system for the Gulf of Mexico. In addition, Shell is operatingthe Subsea Well Response Project, an industry cooperative effort toenhance global well-containment capabilities.Shell also maintains site-specific emergency response plans in theevent of an onshore spill. Like the offshore response plans, these aredesigned to meet Shell guidelines as well as relevant legal andregulatory requirements. They also provide for initial assessment ofincidents and the mobilisation of resources needed to manage them.In 2012, the number of operational spills of more than 100 kilogramsdecreased to 204, down from 211 in 2011. As of the end of February2013, there were three spills under investigation in Nigeria that mayresult in adjustments to the 2012 data. The number of operationalspills of more than 100 kilograms for 2011 was updated to 211 from207 to reflect completion of investigations into spills.As previously noted, detailed data and information on our 2012environmental and social performance will be published in April 2013in the Shell Sustainability Report.Although oil spills in Nigeria resulting from sabotage and theft ofcrude oil remain a significant challenge, there are instances wherespills occur in our operations due to operational failures, accidents orcorrosion. SPDC has been working to reduce operational spills thatare under its control. It maintains a public website to track theresponse, investigation and clean-up of every spill from its facilitiesdue to operational failure, sabotage or theft.In 2011, the United Nations Environment Programme (UNEP) releaseda study of oil spills in Ogoniland, where SPDC operated until 1993.SPDC accepted the recommendations of the UNEP report, and hasestablished an independent scientific advisory panel to review SPDCpractices in the rehabilitation and remediation of oil spill sites in theNiger Delta. In July 2012, the Federal Government of Nigeriaestablished the Hydrocarbon Pollution Restoration Project – anessential first step to implement the recommendations of the UNEPreport. Since the release of the UNEP report, SPDC has undertaken arange of interim activities in Ogoniland where it was free to do so,including helping fund the provision of emergency water supplies andinstalling permanent water facilities in one affected area, launching acommunity health outreach programme across Ogoniland, andcleaning up a number of sites where SPDC was granted access. Theresponse to the UNEP report will require a joint effort by allstakeholders, and SPDC intends to play its full part.Hydraulic fracturingOver the last decade, we have expanded our onshore oil and gasportfolio using advances in technology to access previouslyuneconomic tight oil and gas resources, including those locked inshale formations.One of the key technologies applied in tight-oil and tight-gas fields isknown as hydraulic fracturing, a technique that has been used sincethe 1950s. It involves pumping a mixture of water, sand and chemicaladditives at very high pressure into a rock formation, creating tinyfissures through which oil and gas can flow. To protect and isolatepotable groundwater from hydraulic-fracturing fluids in the wellbore,we line our tight-oil and tight-gas wells with steel casing and cement.All of our oil and gas wells are expected to have two or moresubsurface barriers to protect groundwater. We monitor a wellbore’sintegrity during and, in many cases, after hydraulic fracturing. Whenwe acquire assets, we evaluate the assets’ wells for conformity withour safety and operating principles, and put in place a plan with atimeline for rectifying any inconsistencies.We recycle or reuse as much water as we believe is reasonablypractical. We store, treat or dispose of water in accordance withregulatory requirements.To the extent allowed by our suppliers, Shell makes the material safetydata sheet information available for locations where wells are beinghydraulically fractured. Shell supports regulation to require suppliersto release such information. The chemicals used in hydraulic fracturingwill vary from well to well and from contractor to contractor, but somecan be toxic. For that reason, we have stringent procedures forhandling hydraulic-fracturing chemicals in accordance with the designand assurance processes described above. The formations into whichthese additives may be injected are typically more than a thousandmetres below freshwater aquifers. Our procedures require that potablegroundwater must be isolated from well completion and productionactivities. Moreover, we only use air, water or a water-based liquidwhile drilling through the potable groundwater aquifer to a depthconsiderably below the aquifer. The casing and cement are then put inplace before drilling is resumed and hydraulic fracturing is initiated.In June 2012, methane was detected in a well and a stream in TiogaCounty, Pennsylvania, USA. Shell plugged the well, halting the releaseof methane to the surface. Our investigation determined that a wellabandoned in the 1930s was the likely conduit for the methane gas

eports.shell.com Shell Annual Report and Form 20-F 2012 49Business Review > Environment and societyand water that reached the surface. We are taking additionalprecautionary measures to reduce the risk of abandoned wellspotentially being a conduit for methane to reach water sources.There have been reports linking hydraulic fracturing to earth tremors.Most seismic events occur naturally due to motion along faults understress in the earth’s crust. Some areas are more seismically active thanothers. While more than 1.1 million wells in the USA have beenhydraulically fractured, there have been relatively few reported casesof seismicity detected at the surface near the time and vicinity of suchoperations. Shell analyses publicly available seismic, geologic andgeophysical data to determine historical seismicity in areas where weplan to operate, and if seismic activity beyond historic levels isdetected, we will investigate and review our operations.Some jurisdictions are considering more stringent permitting, wellconstruction or other regulations relating to fracturing, as well as localbans and other land use restrictions. Such regulations could subjectour operations to delays, increased costs or prohibitions.Oil sandsWe are developing mineable oil sands resources in Alberta, Canada.We use hot water to remove bitumen, which is a heavy oil. Tailingsare the residual by-products that remain after the bitumen is separatedfrom the mined oil sands ore. They are composed of some residualbitumen, water, sand, silt, heavy metals, and clay particles. Tailingsare stored in an above-ground tailings pond or in mined-out pits.Tailings contain naturally occurring chemicals that are toxic; wemonitor them continuously, assess their potential environmentalimpact, and take measures to protect wildlife and to preventcontamination of surface water and groundwater. The tailingsmanagement areas at the Athabasca Oil Sands Project’s Muskeg Riverand Jackpine mines cover an area of 24 square kilometres.The land that is mined must be reclaimed – for example, throughrevegetation or reforestation – to a capability equivalent to that whichexisted prior to development, as required by the Alberta government.When dried, tailings are blended and treated to produce materialsuitable for use in land reclamation. We continue to work with theEnergy Resources Conservation Board of Alberta to ensure we meetthe requirements of Directive 074, a regulation which was introducedin 2009 to reduce the amount of liquid tailings, thereby speeding upland reclamation.We also continue to work on tailings technology and collaborate withresearch institutions and other operators to advance solutions andultimately accelerate the pace of land reclamation.In late 2010, we found water at the bottom of a section of a pit at theMuskeg River Mine. The water was confirmed to be saline and tooriginate from an aquifer below the mine pit. We continue to workclosely with the local authorities and industry experts to develop apermanent solution. Meanwhile, the water is contained within asegregated area in the pit.Exploration in AlaskaIn 2012, Shell started a multi-year drilling programme in the Beaufortand Chukchi seas off the coast of Alaska. We previously operated foralmost 50 years in Alaska, including in both these seas, until 1998.We are therefore familiar with these shallow waters and thehydrocarbon reservoirs beneath them, which are of relatively lowpressure. Our preparations to explore for oil in 2012 followed anumber of years of work to lay the foundations for the responsibledevelopment of the area’s potential resources. We have workedclosely with regulators, local communities and other organisations todevelop what we believe are appropriate safeguards.To prepare for drilling off the coast of Alaska, we have developed athorough oil spill response capability that includes capping andcontainment equipment, and oil spill response vessels.In 2012, we completed our top-hole drilling operations off the NorthSlope. This was conducted safely, in accordance with permits andregulatory standards. This work has prepared the ground forcontinued drilling. However, there were challenges. For example,during the first full-scale deployment test of our containment dome, thedome was damaged. We have since put in place a comprehensiveplan to repair and modify the dome. We also experienced challengesin moving our rigs to and from the area of operations.In October 2012, the Arctic Challenger, a purpose-built oil spillcontainment vessel, received U.S. Coast Guard certification andclassification from the American Bureau of Shipping, which was toolate for the 2012 drilling season. At the end of February 2013, thefinal inspection by the U.S. Department of the Interior (Bureau ofSafety and Environmental Enforcement) was pending.After successfully completing its role in supporting our 2012 Alaskaexploration programme, Shell’s Alaska drilling unit Kulluk encountereda series of challenges posed by severe weather and mechanical issueswith its tow ship while on its way to Washington State formaintenance. These incidents caused the Kulluk to run aground off thesouthern coast of Alaska, before being successfully moored off thecoast of Kodiak Island. This occurred after completion of ourexploration programme and did not involve drilling operations. Weare cooperating with the U.S. Coast Guard investigation and arecarrying out a detailed assessment of the vessel.We have decided to pause our exploration drilling activity for 2013 inAlaska’s Beaufort and Chukchi seas to prepare equipment and plansfor a resumption of activity at a later stage. Our exploration in Alaskais a long-term programme that we intend to pursue in a safe andmeasured way.WaterGlobal demand for fresh water is growing while access to fresh wateris becoming more constrained in some parts of the world. It isestimated that, by 2025, two-thirds of the world’s population will livein areas where the demand for fresh water exceeds the availableamount or where the water’s poor quality restricts its use.As world energy demand rises, the energy industry is becoming one ofthe larger industrial consumers of fresh water globally. Shell’s waterfootprint may expand in the future with the development ofunconventional resources, such as shale oil and gas, oil sands, andour biofuel business. A combination of increasing demand for waterresources, growing stakeholder expectations and concerns, andwater-related legislation may drive actions that affect our ability tosecure access to fresh water and to discharge water from ouroperations.At our oil sands operations in Canada we use far less than our waterallocation from the Athabasca River, and we minimise the amountwithdrawn during the winter months, when the flow rate is low. Wealso reduce the amount of fresh water needed in operations byrecycling water from the tailings ponds. About 80% of the water weuse is recycled, and we are investigating new ways to further reducefresh water intake.BUSINESS REVIEW

50 Shell Annual Report and Form 20-F 2012 reports.shell.comBusiness Review > Environment and societyOur Pearl GTL plant in Qatar does not take fresh water from its aridsurroundings and water produced in the GTL manufacturing process isrecycled in the operation.BiofuelsThe international market for biofuels is growing, driven largely by theintroduction of new energy policies in Europe and the USA that call formore renewable, lower-carbon fuels for transport. Shell predicts thatbiofuels will increase from 3% of the global transport fuel mix today tomore than 10% by 2050. Sustainable biofuels are expected to play anincreasingly important role in helping to meet our customers’ fuelneeds and reduce CO 2 emissions.Sustainability challenges exist with today’s biofuels. These include:CO 2 emissions that vary according to the raw materials, productionand distribution processes used; competition with food crops foravailable land; and labour rights.We are one of the world’s largest biofuels distributors. We include ourown long-established sustainability clauses in our supply contracts andwhere possible, we source biofuels that have been certified againstinternationally recognised sustainability standards. These clauses aredesigned to prevent the sourcing of biofuels from suppliers that maynot abide by human rights guidelines, or that may have cleared landrich in biodiversity.We are also developing our own capabilities to produce sustainablebiofuel components. The Raízen joint venture produces approximately2 billion litres annually of ethanol from sugar cane in Brazil – the mostsustainable and cost-competitive of today’s biofuels. This ethanol canreduce CO 2 emissions by around 70% compared with gasoline, fromcultivation of the sugar cane to using the ethanol as fuel.The joint-venture agreement includes developing joint sustainabilityprinciples, standards and operating procedures that also apply tothird-party suppliers. We also continue to work with industry,governments and voluntary organisations towards the development ofglobal sustainability standards for biofuels.We continue to invest in developing more advanced biofuels for thefuture. These new technologies will take time to reach commercialscale. Government support will be required to accelerate their speedof development.Environmental costsWe are subject to a variety of environmental laws, regulations andreporting requirements in the countries where we operate. Infringingany of these laws, regulations and requirements could result insignificant costs, including clean-up costs, fines, sanctions, and thirdpartyclaims, as well as harm our ability to do business and ourreputation.Our ongoing operating expenses include the costs of avoidingunauthorised discharges into the air and water, and the safe disposaland handling of waste.We place a premium on developing effective technologies that arealso safe for the environment. However, when operating at theforefront of technology, there is always the possibility that a newtechnology brings with it environmental impacts that have not beenassessed, foreseen or determined to be harmful, when originallyimplemented. While we believe we take all reasonable precautions tolimit these risks, we are subject to additional remedial environmentaland litigation costs as a result of our operations’ unknown andunforeseeable impacts on the environment. Although these costs haveso far not been material to Shell, no assurance can be made that thiswill always be the case.In this regard, as oil and gas fields age, it is possible in certaincircumstances for seismic activity to increase based on the uniquegeology of individual fields. For example, after more than 60 years ofdeveloping the Groningen gas field in the Netherlands, seismicactivity has recently increased leading to measurable earth tremors.Our Dutch joint venture is currently reviewing its operations, inconsultation with Dutch authorities.Neighbouring communitiesGaining the trust of local communities is essential to the success of ourprojects and operations. We have global requirements for socialperformance – how we perform in our relationship with communities.The requirements set clear rules and expectations for how we engagewith and respect communities that may be impacted by our operations.For all major installations and new projects we appoint a person whois responsible for assessing social impacts and finding ways tomitigate them. In addition, we have specific requirements forminimising our impact on indigenous peoples’ traditional lifestyles,and on handling involuntary resettlement and grievance issues.

eports.shell.com Shell Annual Report and Form 20-F 2012 51Business Review > Section 13(r) of the US Securities Exchange Act of 1934 disclosureSECTION 13(r) OF THEUS SECURITIES EXCHANGEACT OF 1934 DISCLOSUREIn accordance with our General Business Principles and Code ofConduct, Shell seeks to comply with all applicable international tradelaws including applicable sanctions and embargoes.The activities listed below have been conducted outside the US by non-US Shell subsidiaries. For the disclosure below, amounts have beenconverted into US dollars at the average or spot exchange rate, asappropriate. We do not believe that any of the transactions oractivities listed below violated US sanctions.In 2010, we ceased all of our Upstream commercial activities andsuspended new business development in Iran, as a direct consequenceof the international sanctions imposed on the country.We recently began the process to close our small representative officein Iran and terminate all its activities. During 2012, local paymentsmade in connection with this office were transacted through BankTejarat, and subsequently through Bank Karafarin. All payments weremade in local currency.In 2012, in connection with staff employed at this office, as well asIranian expatriates, we paid $635,486 in social security and otherpayroll taxes to the Iranian government. We also paid $167,071 inrental taxes, as well as $573,338 in corporate and withholding taxes,the majority of which relates to prior years’ commercial activities. Inaddition, we paid $14,378 for electricity, gas, telecommunicationsand water to the following suppliers: Mobile TelecommunicationCompany of Iran, Tehran Electrical Distribution Company, TehranProvince Gas Company, Tehran Province Water and Wastewater, andTelecommunication Company of Tehran. None of the above activitiesgenerated gross revenue or net profit during 2012.Some of the suppliers to our local representative office, whichthemselves are not blocked pursuant to US Executive OrderNos. 13224 or 13382, have used banks that are blocked pursuant tothose US Executive Orders. In 2012, some payments to the accounts ofthese suppliers, and to the accounts of our local employees, weremade through Bank Eghtesad Novin, Bank Karafarin, Bank Mellat,Bank Melli, Bank Pasargad, Bank Refah, Bank Saderat, Bank Saman,Bank Sarmayeh, Bank Sepah and Bank Tejarat. We no longer makepayments to accounts held at these banks, with the exception of BankKarafarin where we maintain an account for local transactions. Noneof these activities generated gross revenue or net profit in 2012.However, in 2012, our balance of $6.5 million in the banks discussedabove, used to fund local activities, generated non-taxable interestincome of $1.4 million.In Downstream, through Shell’s trading activities, we purchased crudeoil, condensate and fuel oil from Iran for trading purposes, and forpetrochemical and refining operations. In 2012, our crude oilpurchases from Iran generated a gross revenue of $481 million and anet loss of $6 million; our condensate and fuel oil purchases from Irangenerated a gross revenue of $631 million and a net profit of$4 million. None of these purchases has been paid for, and allcontracts were terminated and activities ceased before June 28,2012.In Downstream, through Shell’s retail credit cards activities, weprovided retail services to the following Iranian diplomatic missions:Botschaft der Islamischen Republik Iran and Permanent Mission of theIslamic Republic of Iran, in Austria; Délégation permanente de laRépublique islamique d’Iran auprès de l’UNESCO, in France;Consulate General of the Islamic Republic of Iran, in Hong Kong,China; Iráni Nagykövetség, in Hungary; Embassy of the IslamicRepublic of Iran, in the Netherlands; and Mission Permanente d’Iran,in Switzerland. In 2012, these activities generated a gross revenue of$97,829 and a net profit of $2,354. We are in the process of eitherterminating these contractual agreements or transferring them to thirdparties as part of larger agreements. Through Shell’s retail credit cardsactivities, we also provided retail services in Switzerland to NaftiranIntertrade Co. (NICO) Sàrl. In 2012, this activity generated a grossrevenue of $10,353 and a net profit of $286. This contract wasterminated in February 2013.In Downstream, through Shell’s marine activities, we provided in 2012oil analysis relating to lubricants used in machinery and equipment onships to a non-sanctioned third party for the Iranian vessel “Souvenir”.This service did not generate any gross revenue. We have informedthe third party that we will no longer provide any services for vesselsthat are subject to US sanctions.Currently, we have approximately $2,336 million payable to, and$11 million receivable from, National Iranian Oil Company. We areunable to settle the payable position as a result of applicablesanctions.BUSINESS REVIEW

52 Shell Annual Report and Form 20-F 2012 reports.shell.comThe Board of Royal Dutch Shell plcTHE BOARD OF ROYAL DUTCH SHELL PLCJorma OllilaCHAIRMANBorn August 15, 1950. A Finnish national, appointed Chairman of theCompany with effect from June 2006. He started his career atCitibank in London and Helsinki, before moving in 1985 to Nokia,where he became Vice President of International Operations.In 1986, he was appointed Senior Vice President Finance andbetween 1990 and 1992 he served as President of Nokia MobilePhones. Between 1992 and 1999 he was President and ChiefExecutive Officer of Nokia, and from 1999 to 2006 he was Chairmanand Chief Executive Officer. He remained Chairman from 2006 untilMay 2012.Chairman of the Nomination and Succession CommitteeHans WijersDEPUTY CHAIRMAN AND SENIOR INDEPENDENT DIRECTORBorn January 11, 1951. A Dutch national, appointed a Non-executiveDirector of the Company with effect from January 2009. Until April2012 he was Chief Executive Officer and Chairman of the Board ofManagement of Akzo Nobel N.V., a position he had held since 2003.He obtained a PhD in economics from Erasmus University Rotterdamwhile teaching there. Later, he became Managing Partner of TheBoston Consulting Group. He served as Dutch Minister for EconomicAffairs from 1994 to 1998, after which he returned to The BostonConsulting Group as Senior Partner until his appointment as a Boardmember of Akzo Nobel N.V. in 2002. He is Chairman of theSupervisory Board of AFC Ajax N.V., a member of the SupervisoryBoard of Heineken N.V., and a trustee of various charities. In January2013, he was appointed a Non-executive Director of GlaxoSmithKlineplc with effect from April 1, 2013.Chairman of the Remuneration Committee and Member of theNomination and Succession CommitteePeter VoserCHIEF EXECUTIVE OFFICERBorn August 29, 1958. A Swiss national, appointed Chief ExecutiveOfficer of the Company with effect from July 2009. He first joinedShell in 1982 and held a variety of finance and business roles inSwitzerland, the UK, Argentina and Chile, including Chief FinancialOfficer of Oil Products. In 2002, he joined the Asea Brown Boveri(ABB) Group of Companies as Chief Financial Officer and a memberof the ABB Group Executive Committee.He returned to Shell in October 2004, when he became a ManagingDirector of The “Shell” Transport and Trading Company, p.l.c. andChief Financial Officer of the Royal Dutch/Shell Group. He was amember of the Supervisory Board of Aegon N.V. from 2004 to 2006,a member of the Supervisory Board of UBS AG from 2005 to April2010 and a member of the Swiss Federal Auditor Oversight Authorityfrom 2006 to December 2010. In 2011, he was awarded the title ofDato Seri Laila Jasa by the Sultan of Brunei.He is a Director of Catalyst, a non-profit organisation which works tobuild inclusive environments and expand opportunities for women andbusiness, and he was appointed to the Board of Directors of RocheHoldings Limited in March 2011. He is also active in a number ofinternational and bilateral organisations, including the EuropeanRound Table of Industrialists and The Business Council.Simon HenryCHIEF FINANCIAL OFFICERBorn July 13, 1961. A British national, appointed Chief FinancialOfficer of the Company with effect from May 2009. He joined Shell in1982 as an engineer at the Stanlow refinery in the UK. Afterqualifying as a member of the Chartered Institute of ManagementAccountants in 1989, he held various finance posts, including FinanceManager of Marketing in Egypt, Controller for the Upstream businessin Egypt, Oil Products Finance Adviser for Asia-Pacific, FinanceDirector for the Mekong Cluster and General Manager Finance for theSouth East Asian Retail business.He was appointed Head of Group Investor Relations in 2001 andChief Financial Officer for Exploration & Production in 2004.Josef AckermannNON-EXECUTIVE DIRECTORBorn February 7, 1948. A Swiss national, appointed a Non-executiveDirector of the Company in May 2008. He is Chairman of the Boardof Directors of Zurich Insurance Group Limited and of Zurich InsuranceCompany Limited, positions he has held since March 2012.He started his professional career in 1977 at SchweizerischeKreditanstalt (SKA), where he held a variety of positions in corporatebanking, foreign exchange/money markets, treasury and investmentbanking. In 1990, he was appointed to SKA’s Executive Board, onwhich he served as President between 1993 and 1996. He joinedDeutsche Bank’s Management Board in 1996 with responsibility forthe investment banking division and, from 2006 and 2002respectively until May 2012, he was Chairman of the ManagementBoard and of the Group Executive Committee of Deutsche Bank AG.He is a member of the Supervisory Board of Siemens AG, the Board ofDirectorsofInvestorABandanumberofadvisoryboards.Healsohasvarious roles in several foundations and academic institutions.Member of the Nomination and Succession Committee and theRemuneration Committee

eports.shell.com Shell Annual Report and Form 20-F 2012 53The Board of Royal Dutch Shell plcGuy ElliottNON-EXECUTIVE DIRECTORBorn December 26, 1955. A British national, appointed aNon-executive Director of the Company with effect from September2010. He is Chief Financial Officer of Rio Tinto plc and Rio TintoLimited, positions he has held since 2002.Following a period in investment banking, he joined the Rio TintoGroup in 1980 after gaining an MBA at INSEAD. He has held avariety of marketing, strategy and general management positions,including Head of Business Evaluation and President of Rio TintoBrasil. He was a Non-executive Director and the Senior IndependentDirector of Cadbury plc from 2007 and 2008 respectively until March2010. While on the Cadbury Board, he served as Chairman of theAudit Committee until April 2009. He has been a member of the UKTakeover Panel since 2012.Chairman of the Audit CommitteeCharles O. HollidayNON-EXECUTIVE DIRECTORBorn March 9, 1948. A US national, appointed a Non-executiveDirector of the Company with effect from September 2010. He servedas Chief Executive Officer of DuPont from 1998 to January 2009, andas Chairman from 1999 to December 2009. He joined DuPont in1970 after receiving a B.S. in industrial engineering from theUniversity of Tennessee and held various manufacturing and businessassignments, including a six-year, Tokyo-based posting as President ofDuPont Asia/Pacific, before becoming Chairman and Chief ExecutiveOfficer.He previously served as Chairman of the World Business Council forSustainable Development, Chairman of The Business Council,Chairman of Catalyst, Chairman of the Society of Chemical Industry –American Section, and is a founding member of the InternationalBusiness Council. He is Chairman of the Board of Directors of Bank ofAmerica Corporation and a Director of Deere & Company.Chairman of the Corporate and Social Responsibility Committee andMember of the Remuneration CommitteeGerard KleisterleeNON-EXECUTIVE DIRECTORBorn September 28, 1946. A Dutch national, appointed a NonexecutiveDirector of the Company with effect from November 2010.He was President/Chief Executive Officer and Chairman of the Boardof Management of Koninklijke Philips Electronics N.V. from 2001 toMarch 2011. Having joined Philips in 1974, he held several positionsbefore being appointed as Chief Executive Officer of Philips’Components division in 1999 and Executive Vice-President of Philipsin 2000.He is Chairman of Vodafone Group plc, a member of the SupervisoryBoardofDaimlerAG,andaDirectorofDellInc.Member of the Audit CommitteeChristine Morin-PostelNON-EXECUTIVE DIRECTORBorn October 6, 1946. A French national, appointed a Non-executiveDirector of the Company in October 2004. She was a member of theSupervisory Board of Royal Dutch Petroleum Company (Royal Dutch)from July 2004 and was a Board member of Royal Dutch untilDecember 2005.Previously, she was Chief Executive of Société Générale de Belgique,Executive Vice-President and a member of the Executive Committee ofSuez S.A., Chairman and Chief Executive Officer of Crédisuez S.A.and a Non-executive Director of Pilkington plc, Alcan Inc. and EXORS.p.A. She is a Non-executive Director of British American Tobaccoplc.Member of the Audit CommitteeSir Nigel Sheinwald GCMGNON-EXECUTIVE DIRECTORBorn June 26, 1953. A British national, appointed a Non-executiveDirector of the Company with effect from July 2012. He was a seniorBritish diplomat who served as British Ambassador to the USA from2007 to 2012. He joined the Diplomatic Service in 1976 and servedin Brussels (twice), Washington and Moscow and in a wide range ofpolicy roles in London. He served as British Ambassador andPermanent Representative to the European Union in Brussels from2000 to 2003. Prior to his appointment as British Ambassador to theUSA, he served as Foreign Policy and Defence Adviser to the PrimeMinister and Head of the Cabinet Office Defence and OverseasSecretariat. He retired from the Diplomatic Service in March 2012. Heis a Senior Adviser to the Universal Music Group and VisitingProfessor at King’s College, London.Member of the Corporate and Social Responsibility CommitteeLinda G. StuntzNON-EXECUTIVE DIRECTORBorn September 11, 1954. A US national, appointed a Non-executiveDirector of the Company with effect from June 2011. She is a foundingpartnerofthelawfirmofStuntz,Davis&Staffier,P.C.,basedinWashington, D.C. Her law practice includes energy andenvironmental regulation as well as matters relating to governmentsupport of technology development and transfer. From 1989 to 1993,she held senior policy positions at the U.S. Department of Energy,including Deputy Secretary. She played a principal role in thedevelopment and enactment of the Energy Policy Act of 1992.From 1981 to 1987, she was an Associate Minority Counsel andMinority Counsel to the Energy and Commerce Committee of theU.S. House of Representatives. She chaired the Electricity AdvisoryCommittee to the U.S. Department of Energy from 2008 to 2009, andwas a member of the Board of Directors of Schlumberger Limited from1993 to 2010. She is a member of the Board of Directors of RaytheonCompany.Member of the Audit CommitteeBOARD AND SENIOR MANAGEMENT

54 Shell Annual Report and Form 20-F 2012 reports.shell.comThe Board of Royal Dutch Shell plcJeroen van der VeerNON-EXECUTIVE DIRECTORBorn October 27, 1947. A Dutch national, appointed a Non-executiveDirector of the Company with effect from July 2009. Previously, hewas Chief Executive from October 2004. He was appointed Presidentof Royal Dutch Petroleum Company in 2000, having been aManaging Director since 1997. He was a Director of Shell CanadaLimited from 2003 until 2005.He was Vice-Chairman and Senior Independent Director of Unilever(which includes Unilever N.V. and Unilever plc) until May 2011 and isChairman of the Supervisory Boards of Koninklijke Philips ElectronicsN.V. and of ING Group. He also has various roles in severalfoundations and charities.Member of the Corporate and Social Responsibility CommitteeGerrit ZalmNON-EXECUTIVE DIRECTORBorn May 6, 1952. A Dutch national, appointed a Non-executiveDirector of the Company with effect from January 1, 2013. He isChairman of the Board of Management of ABN AMRO Bank N.V., aposition he has held since February 2009. Before joining ABNAMRO, he was the Minister of Finance of the Netherlands from 1994until 2002, Chairman of the VVD Liberal Party in the Lower House(2002) and Minister of Finance from 2003 until 2007. During 2007until 2009 he was an adviser to PricewaterhouseCoopers (2007),Chairman of the trustees of the International Accounting StandardsBoard (2007-2010), an adviser to Permira (private equity fund)(2007-2008) and Chief Financial Officer of DSB Bank (2008). Prior to1994, he was head of the Netherlands Bureau for Economic PolicyAnalysis, a professor at Vrije Universiteit Amsterdam and held variouspositions at the Ministry of Finance and at the Ministry of EconomicAffairs. He studied General Economics at Vrije Universiteit Amsterdamand received an Honorary Doctorate in Economics from this university.Member of the Corporate and Social Responsibility CommitteeMichiel BrandjesCOMPANY SECRETARYBorn December 14, 1954. A Dutch national, appointed as CompanySecretary and General Counsel Corporate of the Company inFebruary 2005. He joined Shell in 1980 as a Legal Adviser and waslater appointed Head of Legal in Singapore. Following a period asHead of Legal in China, he was appointed Company Secretary ofRoyal Dutch Petroleum Company.

eports.shell.com Shell Annual Report and Form 20-F 2012 55Senior ManagementSENIOR MANAGEMENTThe Senior Management of the Company comprises the ExecutiveDirectors and those listed below. All are members of the ExecutiveCommittee (see page 80).Ben van BeurdenDOWNSTREAM DIRECTORBorn April 23, 1958. A Dutch national, appointed DownstreamDirector with effect from January 1, 2013. Previously he was ExecutiveVice President Chemicals, and has held various engineering, plantmanagement and operations and commercial roles in the Netherlands,Africa, Malaysia, the UK and the USA.Matthias BichselPROJECTS & TECHNOLOGY DIRECTORBorn July 24, 1954. A Swiss national, appointed Projects &Technology Director with effect from July 1, 2009. Previously, he wasExecutive Vice President Development and Technology, beingresponsible for delivering reserves and production from new upstreamprojects, as well as providing technology applications and researchvia Shell’s Upstream technology organisation.Andrew BrownUPSTREAM INTERNATIONAL DIRECTORBorn January 29, 1962. A British national, appointed UpstreamInternational Director with effect from April 1, 2012. Previously hewas Executive Vice President for Shell’s activities in Qatar and amember of the Upstream International Leadership Team. He wasawarded the Order of the British Empire in 2012 for his services toBritish-Qatari business relations.Hugh MitchellCHIEF HUMAN RESOURCES & CORPORATE OFFICERBorn February 13, 1957. A British national, appointed Chief HumanResources & Corporate Officer with effect from July 1, 2009. In 1997,he became HR Vice President for the Global Oil Products business andin 2003 was appointed Director International, one of the Royal Dutch/Shell Group’s Corporate Centre Directors. In 2005, he was appointedHuman Resources Director of Shell.Marvin OdumUPSTREAM AMERICAS DIRECTORBorn December 13, 1958. A US national, appointed UpstreamAmericas Director with effect from July 1, 2009. Previously, he wasExecutive Vice President for the Americas for Shell Exploration &Production. He was appointed President of Shell Oil Company in2008, having served as Executive Vice President since 2005 withresponsibility for Shell’s Exploration & Production businesses in thewestern hemisphere.Peter Rees QCLEGAL DIRECTORBorn April 21, 1957. A British national, appointed Legal Director witheffect from January 1, 2011. He started his legal career in 1979 at theinternational law firm Norton Rose. He became a partner in 1987 andHead of Dispute Resolution and a member of the Executive Committeein 1997. In 2006, he joined Debevoise & Plimpton as a partner in itsLondon office. In 2009, he was appointed Queen’s Counsel.BOARD AND SENIOR MANAGEMENT

56 Shell Annual Report and Form 20-F 2012 reports.shell.comReport of the DirectorsREPORT OF THE DIRECTORSPrincipal activitiesRoyal Dutch Shell plc (the Company) is a holding company whichowns, directly or indirectly, investments in the numerous companiesconstituting Shell. Shell is engaged worldwide in the principal aspectsof the oil and gas industry and also has interests in chemicals andother energy-related businesses. Details of the Company’s subsidiariescan be found in Exhibit 8.Business ReviewThe information that fulfils the requirements of the Business Review canbe found in the “Chairman’s message” on page 5, the “ChiefExecutive Officer’s review” on pages 6-7 and also in the “BusinessReview” on pages 8-51, all of which are incorporated in this Report ofthe Directors by way of reference. This Report of the Directors alsoserves as the Management Report for the purpose of Disclosure andTransparency Rule 4.1.8R. Throughout this Report of the Directors, theBoard aims to present a balanced and understandable assessment ofthe Company’s position and prospects in its reporting to shareholdersand other interested parties.Research and developmentShell carries out its research and development programmes in aworldwide network of technology centres complemented by externalpartnerships. The main technology centres are in the Netherlands andthe USA, with other centres in Canada, China, Germany, India,Norway, Oman, Qatar and the UK. Further details of Shell’s researchand development, including expenditure, can be found onpages 18-19 of the “Business Review” as well as in the “ConsolidatedStatement of Income”.Recent developments and post-balance sheeteventsRecent developments and post-balance sheet events are given inNote 28 to the “Consolidated Financial Statements”.Financial statements and dividendsThe “Consolidated Statement of Income” and “Consolidated BalanceSheet” are available on pages 99 and 100 respectively.The table below sets out the dividends on each class of share and eachclass of American Depositary Share (ADS [A]). The Companyannounces its dividends in US dollars and, at a later date, announcesthe euro and sterling equivalent amounts using a market exchangerate.[A] ADSs are listed on the New York Stock Exchange under the symbols RDS.Aand RDS.B. Each ADS represents two shares – two A shares in the case ofRDS.AortwoBsharesinthecaseofRDS.B.Dividends on A shares are paid by default in euros, although holdersare able to elect to receive dividends in sterling. Dividends on B sharesare paid by default in sterling, although holders are able to elect toreceive dividends in euros. Dividends on ADSs are paid in US dollars.In September 2010, the Company introduced a Scrip DividendProgramme which enables shareholders to increase their shareholdingby choosing to receive new shares instead of cash dividends, ifapproved by the Board. Only new A shares are issued under theprogramme, including to shareholders who hold B shares. Full detailsof the programme can be found at www.shell.com/dividend.The Directors have announced a fourth quarter interim dividend as setout in the table below, payable on March 28, 2013, to shareholderson the Register of Members at close of business on February 15,2013. The closing date for scrip election and dividend currencyelection was March 1, 2013 [B]. The euro and sterling equivalentsannouncement date was March 8, 2013.[B] Different scrip and dividend currency election dates may apply toshareholders holding shares in a securities account with a bank or otherfinancial institution ultimately holding through Euroclear Nederland. Suchshareholders can obtain the applicable deadlines from their broker,financial intermediary, bank or other financial institution where they holdtheir securities account. A different scrip election date may also apply toregistered and non-registered ADS holders. Registered ADS holders cancontact The Bank of New York Mellon for the applicable deadline. NonregisteredADS holders can contact their broker, financial intermediary,bank or other financial institution for the applicable election deadline.Creditor payment policy and practiceStatutory regulations issued under the UK Companies Act 2006 (theAct) require a public company to make a statement of its policy andpractice on the payment of trade creditors. As a holding companywhose principal business is to hold shares in subsidiaries, theCompany has no trade creditors. Given the international nature ofDIVIDENDS 2012A shares B shares[A] A ADSs B ADSs$ € pence $ pence € $ $Q1 0.43 0.3468 27.92 0.43 27.92 0.3468 0.86 0.86Q2 0.43 0.3421 27.08 0.43 27.08 0.3421 0.86 0.86Q3 0.43 0.3333 26.86 0.43 26.86 0.3333 0.86 0.86Q4 0.43 0.3314 28.79 0.43 28.79 0.3314 0.86 0.86Total announced in respect of the year 1.72 1.3536 110.65 1.72 110.65 1.3536 3.44 3.44Amount paid during the year 1.3424 108.60 108.60 1.3424 3.42 3.42[A] It is expected that holders of B shares will receive dividends through the dividend access mechanism applicable to such shares. The dividend accessmechanism is described more fully on pages 85-86.

eports.shell.com Shell Annual Report and Form 20-F 2012 57Report of the DirectorsShell’s operations there is no specific company-wide creditor paymentpolicy. Relationships with suppliers are governed by Shell’scommitment to long-term relations, based on trust and mutuallybeneficial arrangements. Shell U.K. Limited, Shell’s most significant UKoperating company, had approximately 22 days’ purchasesoutstanding at December 31, 2012 (2011: 30 days), based on theaverage daily amount invoiced by suppliers during the year. ShellU.K. Limited has adopted the Prompt Payment Code, a copy of whichis available from the Company Secretary.Directors’ responsibilities in respect of thepreparation of the annual report and accountsThe Directors are responsible for preparing the Annual Reportincluding the financial statements in accordance with applicable lawand regulations. Company law requires the Directors to preparefinancial statements for each financial year. Under that law theDirectors have prepared the Consolidated and Parent CompanyFinancial Statements in accordance with International FinancialReporting Standards (IFRS) as adopted by the European Union (EU). Inpreparing these financial statements, the Directors have also elected tocomply with IFRS as issued by the International Accounting StandardsBoard (IASB). Under company law the Directors must not approve thefinancial statements unless they are satisfied that they give a true andfair view of the state of affairs of Shell and the Company and of theprofit or loss of Shell and the Company for that period. In preparingthese financial statements, the Directors are required to:▪ select suitable accounting policies and then apply them consistently;▪ make judgements and accounting estimates that are reasonable andprudent; and▪ state whether IFRS as adopted by the EU and IFRS as issued by theIASB have been followed.The Directors are responsible for keeping adequate accountingrecords that are sufficient to show and explain the transactions of Shelland the Company and disclose with reasonable accuracy, at any time,the financial position of Shell and the Company and to enable them toensure that the financial statements comply with the Companies Act2006 and, as regards the Consolidated Financial Statements, withArticle 4 of the IAS Regulation and therefore are in accordance withIFRS as adopted by the EU. The Directors are also responsible forsafeguarding the assets of Shell and the Company and hence fortaking reasonable steps for the prevention and detection of fraud andother irregularities.Each of the Directors, whose names and functions are listed onpages 52-54, confirms that, to the best of their knowledge:▪ the financial statements, which have been prepared in accordancewith IFRS as adopted by the EU, and with IFRS as issued by the IASB,give a true and fair view of the assets, liabilities, financial positionand profit of Shell and the Company;▪ the Business Review includes a fair review of the development andperformance of the business and the position of Shell, together with adescription of the principal risks and uncertainties that it faces; and▪ he or she has taken all the steps that ought to have been taken inorder to become aware of any relevant audit information and toestablish that the auditors are aware of that information. There is norelevant audit information of which the auditors are unaware.The Directors are responsible for the maintenance and integrity of theShell website (www.shell.com). Legislation in the UK governing thepreparation and dissemination of financial statements may differ fromlegislation in other jurisdictions.Board of DirectorsThe Directors during the year were Josef Ackermann, MalcolmBrinded (who stood down with effect from April 1, 2012), Guy Elliott,Simon Henry, Charles O. Holliday, Lord Kerr of Kinlochard (who stooddown with effect from May 22, 2012), Gerard Kleisterlee, ChristineMorin-Postel, Jorma Ollila, Sir Nigel Sheinwald (appointed with effectfrom July 1, 2012), Linda G. Stuntz, Jeroen van der Veer, Peter Voserand Hans Wijers.Appointment and reappointment of DirectorsIn line with the UK Corporate Governance Code, all Directors will retireat each Annual General Meeting (AGM) and, subject to the Articles ofAssociation and their wish to continue as a Director of the Company,seek reappointment by shareholders. At the 2013 AGM, this will includeGerrit Zalm who was appointed as a Director of the Company by theBoard with effect from January 1, 2013. Christine Morin-Postel andJeroen van der Veer will not be seeking reappointment and will bestanding down at the close of business of the 2013 AGM after havingserved as Non-executive Directors since July 2004 and July 2009respectively. Prior to his role as a Non-executive Director, Jeroen van derVeer had served as Chief Executive from October 2004 until June 2009.The biographies of all Directors are given on pages 52-54 and, forthose seeking reappointment, also in the Notice of the AGM. Details ofthe Executive Directors’ contracts can be found on page 67 and copiesare available for inspection from the Company Secretary.Furthermore, a copy of the form of these contracts has been filed withthe U.S. Securities and Exchange Commission as an exhibit.The terms and conditions of appointment of Non-executive Directorsare set out in their letters of appointment with the Company which, inaccordance with the UK Corporate Governance Code, are availablefor inspection from the Company Secretary.No Director is, or was, materially interested in any contract subsistingduring or at the end of the year that was significant in relation to theCompany’s business. See also “Related party transactions” onpage 58.Financial risk management, objectives andpoliciesDescriptions of the use of financial instruments and Shell’s financialrisk management objectives and policies are set out in the “BusinessReview” and on pages 83-84, and also in Note 21 to the“Consolidated Financial Statements”.Qualifying third-party indemnitiesThe Company has entered into a deed of indemnity with each Directorwho served during the year under identical terms. The deedsindemnify the Directors to the widest extent permitted by theapplicable laws of England against all liability incurred as a Directoror employee of the Company or of certain other entities.REPORT OF THE DIRECTORS

58 Shell Annual Report and Form 20-F 2012 reports.shell.comReport of the DirectorsDirectors’ interestsThe interests (in shares of the Company or calculated equivalents) ofthe Directors in office at the end of the year, including any interests ofa “connected person” (as defined in the Disclosure and TransparencyRules), are set out below:DIRECTORS’ INTERESTS [A]January 1, 2012 December 31, 2012Ashares Bshares Ashares BsharesJosef Ackermann 10,000 – 10,253 –Guy Elliott – 5,677 – 5,677Simon Henry 9,175 50,843 9,175 51,652Charles O. Holliday – 20,000[B] – 20,000[B]Gerard Kleisterlee 5,000 – 5,000 –Christine Morin-Postel 8,485 – 8,485 –Jorma Ollila 25,000 – 25,000 –Sir Nigel Sheinwald – 470[C] – 470Linda G. Stuntz – 3,000[D] – 8,400[E]Jeroen van der Veer 195,195 – 383,400 –Peter Voser 148,496 – 289,013 –Hans Wijers 5,251 – 5,251 –[A] Excludes interests in shares or options awarded under the Long-termIncentive Plan, the Deferred Bonus Plan, and the share option plans.Interests under these plans as at January 1, 2012, and December 31,2012, are given on pages 72-76.[B] Held as 10,000 ADSs (RDS.B ADS). Each RDS.B ADS represents twoBshares.[C] At the date of appointment.[D] Held as 1,500 ADSs (RDS.B ADS). Each RDS.B ADS represents twoBshares.[E] Held as 4,200 ADSs (RDS.B ADS). Each RDS.B ADS represents twoBshares.There were no changes in Directors’ share interests during the periodfrom December 31, 2012, to March 13, 2013, except in the case ofSimon Henry whose interests increased by 277 B shares, and for thosechanges in the interests in shares or options awarded under the LongtermIncentive Plan, the Deferred Bonus Plan, and the share optionplans set out in the “Directors’ Remuneration Report” on pages 72-76.As at March 13, 2013, the Directors and Senior Management [A] ofthe Company beneficially owned individually and in aggregate(including shares under option) less than 1% of the total shares of eachclass of the Company shares outstanding.[A] The Senior Management of the Company is given on page 55.Related party transactionsOther than disclosures given in Notes 5 and 10 to the “ConsolidatedFinancial Statements”, there were no transactions or proposedtransactions that were material to either the Company or any relatedparty. Nor were there any transactions with any related party thatwere unusual in their nature or conditions.Repurchases of sharesOn May 22, 2012, shareholders approved an authority, which willexpire at the end of the 2013 AGM, for the Company to repurchaseup to a maximum of 632 million of its shares (excluding sharepurchases for employee share-based compensation plans). During2012, 43.7 million B shares with a nominal value of €3.1 million($3.7 million) (representing 0.7% of the Company’s entire issuedshare capital at December 31, 2012) were purchased for cancellationfor a total cost of $1,492 million, including expenses, at an averageprice of $34.13 per B share. During the period January 1, 2013, toFebruary 19, 2013, no share purchases were made.The Board continues to regard the ability to repurchase issued sharesin suitable circumstances as an important part of the financialmanagement of the Company. A resolution will be proposed at the2013 AGM to renew the authority for the Company to purchase itsown share capital up to specified limits for another year. More detailof this proposal is given in the Notice of the AGM.Political and charitable contributionsNo donations were made by the Company or any of its subsidiaries topolitical parties or organisations during the year. Shell Oil Companyadministers the non-partisan Shell Oil Company Employees’ PoliticalAwareness Committee (SEPAC), a political action committeeregistered with the US Federal Election Commission. Eligibleemployees may make voluntary personal contributions to the SEPAC.Shell, through individual subsidiaries, sponsors social investmentprogrammes in many countries throughout the world. In the UK, Shelldonated $16 million in 2012 to charitable causes and sponsorships.This included donations to: “The Big Bang”, the UK’s largest singlescience and engineering fair for young people; a climate sciencegallery at the Science Museum, London; the “Shell ClassicInternational”, a series of international concerts held at the RoyalFestival Hall, London; and the Shell Foundation, an independentcharity established in 2000 that applies business thinking to globaldevelopment challenges.Diversity and inclusionDetailed information can be found in the “Business Review” onpage 46.Employee communication and involvementDetailed information can be found in the “Business Review” onpage 46.Corporate social responsibilityA summary of Shell’s approach to corporate social responsibility canbe found on pages 47-50 of the “Business Review”. Further details willbe available in the Shell Sustainability Report 2012.Essential contracts and Takeovers DirectiveinformationShell does not have contracts or other arrangements that individuallyare essential to its business, nor does it have any significantagreements that would take effect, alter or terminate upon a change ofcontrol of the Company following a takeover bid.SHARE CAPITALThe Company’s issued share capital as at December 31, 2012, is setout in Note 11 to the “Parent Company Financial Statements”. Thepercentage of the total issued share capital represented by each classof share is given below. Other disclosure requirements pursuant to theTakeovers Directive can be found below and on pages 85-88.SHARE CAPITAL PERCENTAGE %Share classA ordinary 59.03B ordinary 40.97Sterling deferredde minimisTRANSFER OF SECURITIESThere are no significant restrictions on the transfer of securities.SHARE OWNERSHIP TRUSTSShell currently operates three primary employee share ownershiptrusts: a Dutch Stichting and two US Rabbi Trusts. The shares held by

eports.shell.com Shell Annual Report and Form 20-F 2012 59Report of the Directorsthe Stichting are voted by the Stichting Board and the shares in theRabbi Trusts are voted by the Voting Trustee, Evercore Trust Company,N.A. Both the Stichting Board and the Voting Trustee are independentof the Company.The UK Shell All Employee Share Ownership Plan (SAESOP) has aseparate related share ownership trust. Shares held for the SAESOPare voted by its trustee, EES Corporate Trustees Limited, as directed bythe participants.SIGNIFICANT SHAREHOLDINGSInformation concerning significant shareholdings is given on page 90.ARTICLES OF ASSOCIATIONInformation concerning the Articles of Association is given onpages 85-88.AuditorsPricewaterhouseCoopers LLP has signified its willingness to continue inoffice and a resolution for its reappointment will be proposed at the2013 AGM.Corporate governanceThe Company’s statement on corporate governance is included in the“Corporate governance” report on pages 77-88 and is incorporatedin this “Report of the Directors” by way of reference.Annual General MeetingThe Annual General Meeting (AGM) will take place on May 21,2013, at the Circustheater, Circusstraat 4, The Hague, TheNetherlands. Details of the business to be put to shareholders at theAGM can be found in the Notice of the Annual General Meeting.REPORT OF THE DIRECTORSSigned on behalf of the Board/s/ Michiel BrandjesMichiel BrandjesCompany SecretaryMarch 13, 2013

60 Shell Annual Report and Form 20-F 2012 reports.shell.comDirectors’ Remuneration ReportDIRECTORS’ REMUNERATION REPORTINDEX TO THE DIRECTORS’REMUNERATION REPORT60 Letter from the Chairman of the Remuneration Committee61 Overview63 The Remuneration Committee63 Remuneration policy for Executive Directors63 Remuneration principles64 Strategy alignment64 Pay for performance64 Competitiveness64 Shareholding64 Consistency65 Compliance65 Risk assessment65 Remuneration elements65 Base salary65 Annual bonus65 Long-term incentives67 Pensions67 Contractsofemployment67 External appointments68 Remuneration determinations for Executive Directors68 Base salary68 Annual bonus69 Other cash and non-cash earnings69 Long-term Incentive Plan69 Deferred Bonus Plan69 Pension interests70 Non-executive Directors70 Remuneration policy70 Additional statutory disclosure71 Data tables71 Executive Directors75 Non-executive DirectorsDear Shareholders,As the Chairman of the Remuneration Committee (REMCO), I ampleased to present the 2012 Directors’ Remuneration Report of RoyalDutch Shell plc.This report covers the remuneration of Directors for 2012. Thereported remuneration of Executive Directors is driven by performanceagainst agreed annual and multi-year targets. Key components werethe 2012 Scorecard results leading to an above target annual bonusand the 2009 long-term incentive awards vesting at 60% of target.Base salaries for the Executive Directors were reviewed and adjustedwith effect from January 1, 2013.No policy changes were made during 2012.As stated in last year’s annual report, Malcolm Brinded stood down asan Executive Director with effect from April 1, 2012. His reportedremuneration relates to his period as an Executive Director during theyear and his end-of-service arrangements.REMCO has had a number of interactions with shareholders during theyear. There was a consensus that the long-term performance of Shellshould guide our remuneration policies, along with our commitmentsto transparency and ongoing shareholder engagement. As aremuneration committee, we continue to operate with this in mind.Overall we received positive feedback on our Directors’ RemunerationReport and its consistent format. Despite this, there is always room forimprovement. This year we have made an effort to explain better howREMCO accounts for individual performance in determining annualbonuses. We have also adjusted the way we describe the DeferredBonus Plan and Directors’ shareholdings.We subscribe to the ambition of the UK government to increase thetransparency of remuneration reporting. We therefore look forward tothe revised regulations in this area for the 2013 Directors’Remuneration Report.I hope you find our 2012 Directors’ Remuneration Report clear,transparent and informative. As always, I welcome your feedback andlook forward to meeting you at our AGM on May 21, 2013.Hans WijersChairman of the Remuneration CommitteeMarch 12, 2013

eports.shell.com Shell Annual Report and Form 20-F 2012 61Directors’ Remuneration Report > OverviewOVERVIEWREMCO continued operating existing policies in 2012. Particularly in thearea of performance conditions relating to variable pay, no reviews wererequired.In 2012, we continued our constructive engagements with majorshareholders and shareholder institutions. The 2012 AGM vote resultedin 90.88% in favour of the 2011 Remuneration Report resolution.Further developments in the governance landscape could requirechanges to our policies. During 2013, REMCO will consider shareplan design, as the existing plan rules governing long-term incentiveswill expire in 2015. REMCO will seek shareholder views whereappropriate.In respect of the reward instruments in use, they are designed to makeexecutive reward strongly correlated to business success. Where theresultsdonotmatchbusinessperformance,REMCOhasadutytomake adjustments. The table below provides an overview of theExecutive Directors’ remuneration policy in 2012 and REMCOdecisions made in respect of each element.Malcolm Brinded stood down as an Executive Director with effect fromApril 1, 2012. In this report we include remuneration related to hisperiod as an Executive Director. The forward-looking statements arerelated to the two remaining Executive Directors.Base salary and pensionablesalaryAnnual bonusLong-term Incentive Plan (LTIP)Deferred Bonus Plan (DBP)Policy▪ Base salaries are quoted in euros and are reviewed inJanuary.▪ Pensionable salaries in the base country are reviewedatthesametimeonthebasisofbasecountrymarketmovements and conversion of the euro base salaryusing long-term exchange rates.▪ Target levels (as a percentage of base salary):Chief Executive Officer – 150%Other Executive Directors – 110%Maximum bonus – 250% and 220%, respectively.▪ Calculation of an Executive Director’s annual bonus:– Shell results at the end of the year are translated intoa score of between zero and two, on the basis of apredefined scorecard and REMCO’s judgement.– Bonus awards are based on this score multiplied bythe target bonus levels, and adjusted for individualperformance as determined by REMCO.▪ Target award levels (as a percentage of base salary):Chief Executive Officer – 300%Other Executive Directors – 240%Maximum vesting – 600% and 480%, respectively.▪ The actual value delivered after three years depends onthe relative performance of LTIP measures against otheroil majors.▪ LTIP shares to be held for two years following vesting.▪ Shareholding requirements – three times base salary forthe Chief Executive Officer and two times base salaryfor other Executive Directors built up over five years.▪ Executive Directors are required to invest no less than25%, and can choose to invest up to 50% of theirannual bonus in deferred bonus shares.▪ Half of these deferred bonus shares are matchable withadditional performance-related shares, which can beearned on the same basis as the LTIP vesting.Determinations▪ Effective from January 1, 2013, base salaries wereincreased as follows: Chief Executive Officer Peter Voserto €1,640,000 (+2.5%) and Chief Financial OfficerSimon Henry to €985,000 (+4.8%).▪ Pensionable salaries were also reviewed and, effectiveJanuary 1, 2013, increased to CHF 2,540,000 (+2.2%)for Peter Voser and to £720,000 (+4.9%) for SimonHenry.▪ The Executive Directors’ Scorecard for 2012 produced acalculated score of 1.35 which REMCO confirmed to bethe final outcome.▪ Considered individual performance and set theindividual bonuses for 2012 at €3,300,000 and€1,500,000 for Peter Voser and Simon Henry,respectively. The prorated 2012 bonus for MalcolmBrinded was set at €550,000.▪ New LTIP awards were made on February 28, 2013 (seepage 69 for further details).▪ On March 12, 2013, 175% of the LTIP shares awardedin 2010 vested, in line with the plan rules and based onrelative performance on TSR, growth in EPS,hydrocarbon production and net cash from operatingactivities. This is how Shell performed relative to itscompetitors: TSR (second), EPS (first), hydrocarbonproduction (second) and net cash from operatingactivities (first).▪ Both Executive Directors elected to defer the maximum50% of the 2012 annual bonus into the DBP. Sharesworth €1,650,000 and €750,000 were purchased byPeter Voser and Simon Henry, respectively.▪ On March 12, 2013, 175% of the performance-relatedmatching DBP shares awarded in 2010 to Peter Voser,Simon Henry and Malcolm Brinded vested.REMUNERATION REPORT

62 Shell Annual Report and Form 20-F 2012 reports.shell.comDirectors’ Remuneration Report > OverviewThis report follows the UK requirements of the Companies Act 2006,the Large and Medium-sized Companies and Groups (Accounts andReports) Regulations 2008, the Listing Rules and the UK CorporateGovernance Code. It outlines the remuneration policies and individualremuneration details for Executive Directors and Non-executiveDirectors of the Company for the year ended December 31, 2012.The Board has approved this report, and it will be presented toshareholders for approval at the AGM of the Company on May 21,2013.The base currency in this Directors’ Remuneration Report is the euro.Where amounts are shown in other currencies, an average exchangerate for 2012 is used, unless a specific date is stated, in which casethe average exchange rate for the specific date is used.The table below summarises the 2012 compensation for the currentExecutive Directors. The total amount includes:▪ base salary earned in 2012;▪ annual bonus for 2012 performance paid in 2013;▪ other cash and non-cash remuneration;▪ value of LTIP and Performance Share Plan (PSP) awards granted in2009 that vested in March 2012;▪ value of DBP awards granted in 2009 that vested in March 2012,representing the matching shares delivered less the original amountdeferred; and▪ value of exercised share options.FORMER EXECUTIVE DIRECTOR MALCOLM BRINDEDThe end of employment arrangements for Malcolm Brinded and theway they feature in this report are summarised below.▪ The Earnings of Executive Directors table on page 71 contains thebase salary paid for his period of service as an Executive Directorand the annual bonus for 2012. The cash benefits section of thistable includes the severance payment of €2,520,000, as disclosedin the 2011 Directors’ Remuneration Report.▪ Certain shares under the Long-term Incentive Plan lapsed as awardsgranted in 2011 and 2012 were prorated for service. This lapsing isreflected in the table on page 72.▪ The status of the awards under the Deferred Bonus Plan is reported inthe table on page 73.▪ Share options granted in 2004 were exercised in 2012 after hestood down as an Executive Director. This exercise is reflected in theShare Options table on page 74.▪ Accrued pension entitlements are reported on page 74.▪ Shell purchased the house Malcolm Brinded owned in theNetherlands. This transaction resulted in a one-off additionalpayment to him to cover the loss in value of the property. Adescription of this transaction and the additional payment isprovided in the footnotes to the Earnings of Executive Directors table.2012 SUMMARY COMPENSATION € THOUSANDPeterVoserSimonHenryEarnings [A] 5,086 2,502Value of released 2009 LTIP awards 2,468 –Value of released 2009 DBP awards 1,026 –Value of released 2009 PSP awards – 1,412[B]Value of exercised share options – 298Total compensation in euros 8,580 4,212in dollars 11,033 5,416in sterling 6,962 3,417[A] More details can be found on page 71.[B] Value of shares under the PSP, received prior to appointment as anExecutive Director, released in March 2012.The UK’s Department for Business, Innovation & Skills has published aconsultation on directors’ remuneration reporting (set out in its“Consultation on revised remuneration reporting regulations”document dated June 2012). One of the draft proposals is thepublication of a single remuneration figure for each director. It isproposed that this single figure includes a value for the increase ineach director’s accrued pension over the year. For defined benefitpension arrangements it is proposed that this is calculated bymultiplying the annual increase in accrued pension by twenty (theso-called HMRC Lifetime Allowance method). The annual increase inaccrued pension for 2012 can be found on page 74 in the currency ofthe pension plan. Multiplying this increase by 20, without reduction forinflation, and expressed in euros gives an illustrative value for theincrease in accrued pension during 2012 of €954,000 for PeterVoser and €802,000 for Simon Henry.

eports.shell.com Shell Annual Report and Form 20-F 2012 63Directors’ Remuneration Report > The Remuneration CommitteeTHE REMUNERATIONCOMMITTEEREMCO’s key responsibilities in respect of Executive Directors include:▪ setting remuneration policy;▪ agreeing performance frameworks, setting targets and reviewingperformance;▪ determining actual remuneration and benefits; and▪ determining contractual terms.REMCO’s Terms of Reference are reviewed regularly and updated asappropriate. They are available at www.shell.com/investor. Copiescan be obtained from the Company Secretary. See inside back coverfor details.The members of the Remuneration Committee are:▪ Hans Wijers (Chairman of the Committee);▪ Josef Ackermann; and▪ Charles O. Holliday.Their biographies are given on pages 52-54; REMCO meetingattendance is given on page 79. No other Non-executive Directorsparticipated in the REMCO meetings.Advice and consultation from within Shell on various subjects includingthe Executive Directors’ Scorecard and the remuneration of SeniorManagement was sought from:▪ Peter Voser, Chief Executive Officer;▪ Hugh Mitchell, Chief Human Resources & Corporate Officer andSecretary to the Committee; and▪ Michael Reiff, Executive Vice President Remuneration, Benefits &Services.The Chairman of the Board and the Chief Executive Officer wereconsulted on remuneration decisions affecting other ExecutiveDirectors.REMUNERATION POLICY FOREXECUTIVE DIRECTORSREMCO needs to ensure the remuneration structure and its decisionsgenerate fair and appealing long-term rewards for the ExecutiveDirectors while reflecting Shell business performance and sustainedshareholder-value growth.Shell’s Executive Directors are asked to make decisions in executing astrategy set by the Board, which represents the Company’sshareholders.The Executive Directors’ remuneration package comprises a basesalary, an annual bonus and long-term incentives, as well as a pensionplan and other benefits.Remuneration principlesREMCO makes policy decisions guided by the following principles:▪ alignment with Shell’s strategy;▪ pay for performance;▪ competitiveness;▪ long-term creation of shareholder value;▪ consistency;▪ compliance; and▪ risk assessment.REMUNERATION REPORTIn addition, REMCO engaged Deloitte LLP to provide an externalperspective on shareholder voting, corporate governancedevelopments and market practice. Deloitte LLP also provided otherconsulting services to Shell during the year, including advice ontaxation and operational excellence, but did not provide advice onBoard executive remuneration matters other than for REMCO.

64 Shell Annual Report and Form 20-F 2012 reports.shell.comDirectors’ Remuneration Report > Remuneration policy for Executive DirectorsREMUNERATION SUPPORTING THE STRATEGIC FOCUSStrategic focus Investment priorities driven on a global thematic basis:– Operational performance and selective growth of upstream and downstream engines– Growth priority: integrated gas, deep water and resources plays (shale oil and gas)– Development of future opportunities More efficient deployment of capital, people and technologySHORT TERM: ONE YEARBase salaryAnnual bonusMEDIUM TERM: FIVE YEARSLTIPDeferred bonusLONG TERM: FIVE TO TEN YEARSPersonal shareholdings Base salary competitively positionedrecognising the scope and complexity of therole. Annual bonus based on performance againsta scorecard of short-term strategic targetsand individual achievement. Three-year growth in TSR, EPS (CCS),hydrocarbon production and net cash fromoperating activities, compared with that ofBP, Chevron, ExxonMobil and Total,determines LTIP pay-out and DBP match. LTIP shares need to be held for two yearsafter vesting. Shareholding requirement for tenure in role. Variable pay gains subject to clawbackprovisions, extending three years beyondpayment.STRATEGY ALIGNMENTThe Executive Directors’ compensation package is strongly linked tothe achievement of stretch targets that are seen as indicators of theexecution of Shell’s strategy. REMCO considers this link to be critical.The chart above summarises the connection.PAY FOR PERFORMANCEThe chart below shows that, with on-target values, more than threequartersof the Executive Directors’ compensation (excluding pension)is linked directly to Shell’s performance through the variable payinstruments described below. Our short-term incentives are linked toabsolute targets, and long-term incentives are linked to relative targetswhich reflect the interests of shareholders.TARGET PAY DISTRIBUTIONBase salary 21%Annual bonus 27%Long-term incentives 52%REMCO believes the pay distribution ratios and the gearing betweentarget and maximum remain fit for purpose. A consequence of thisdesign is that the total compensation can differ substantially from yearto year, depending on Shell and individual performance.COMPETITIVENESSREMCO determines remuneration levels by reference to companies ofcomparable size, complexity and global scope. The current keycomparator group consists of BP, Chevron, ExxonMobil and Total aswell as a selection of major Europe-based companies. The spreadprovides a balanced mix across industries. There was no change in thecomparator group in 2012.EUROPEAN COMPARATOR GROUPAllianz Diageo Rio TintoAnglo American E.ON RocheAstraZeneca GlaxoSmithKline SiemensAXA HSBC UnileverBarclays Nokia VivendiBHP Billiton Novartis VodafoneDeutsche BankPhilipsSHAREHOLDINGREMCO believes that Executive Directors should align their interestswith those of shareholders by holding shares in Royal Dutch Shell plc.The Chief Executive Officer is expected to build up a shareholdingover five years of three times his base salary. Other ExecutiveDirectors are expected to build up a shareholding to the value of twotimes their base salary over the same period.REMCO periodically translates these guidelines into absoluteshareholding targets for simplicity and consistency. These targets werereviewed in 2012, and were re-confirmed at 240,000 shares for theChief Executive Officer and 100,000 shares for other ExecutiveDirectors.Executive Directors are required to maintain the required shareholdinglevel for the full period of their appointment.Bonuses invested in shares in the DBP, including accrued dividends,count towards the guideline. Unexercised share options, unvested LTIPawards and matching shares under the DBP that are subject toperformance conditions do not count.As at December 31, 2012, the relevant shareholding of Royal DutchShell plc shares by Peter Voser was 426,638 A shares, equivalent toapproximately seven times his base salary, and by Simon Henry was9,175 A shares and 99,843 B shares, equivalent to approximatelythreetimeshisbasesalary.CONSISTENCYThe remuneration structure for Executive Directors is generallyconsistent with that for the Senior Management of Shell. Thisconsistency builds a culture of alignment with Shell’s purpose and a

eports.shell.com Shell Annual Report and Form 20-F 2012 65Directors’ Remuneration Report > Remuneration policy for Executive Directorscommon approach to sharing in Shell’s success. REMCO sets theprinciples of the remuneration policy and has oversight of theindividual remuneration decisions for Senior Management.Executive Directors’ benefits are also in line with those for otheremployees on the basis of local market practices. Personal loans orguarantees are not provided to Executive Directors. They areemployed under local Dutch terms and conditions – except for theirpensions. Their base salary levels are therefore set in euros. Only basesalaries, translated into their pension plan’s currency, arepensionable, and referred to as the pensionable salary.REMCO takes pay and employment conditions of other employeeswithin Shell into account when determining Executive Directors’ payand benefits, to ensure alignment and consistency among the differentlevels of the organisation. Executive Directors’ annual performance ismeasured on the basis of a Shell-wide scorecard.2013 ANNUAL BONUS SCORECARD MEASURES FOREXECUTIVE DIRECTORS30% WEIGHT 50% WEIGHTCASH FLOWCash generated from operations thatfactors in the impact of commodityprice fluctuations as well as businessperformance so that ExecutiveDirectors, like shareholders, share theeffects of both.20% WEIGHTSUSTAINABLE DEVELOPMENTEqually weighted indicators of safetyand environmental performance.OPERATIONAL EXCELLENCE▪ Project delivery: indicator of Shell’sability to deliver projects on-streamon time and on budget.▪ Hydrocarbon production, sales ofliquefied natural gas, refinery andchemical plant availability:indicators of the full and effectiveuse of resources – both facilitiesand people – according to therelevant business.COMPLIANCEREMCO takes its decisions in the context of the Shell General BusinessPrinciples. It also ensures compliance with applicable laws andcorporate governance requirements when designing andimplementing policies and plans.RISK ASSESSMENTREMCO ensures the remuneration structures and rewards meet riskassessmenttests to ensure that shareholder interests are safeguardedand that inappropriate actions are avoided. For example:▪ all performance-based incentives awarded to Executive Directors aresubject to a clawback provision which applies in situations offinancial restatements due to material non-compliance and/ormisconduct by an Executive Director or misconduct through hisdirection or non-direction. To facilitate clawback actions, specificprovisions are incorporated in all incentive award documents issuedfrom 2011. The clawback period covers at least the three-yearperiod preceding the decision to claw back;▪ the use of multiple performance measures, including non-financialand relative measures, mitigates unintended financial andbehavioural consequences;▪ the Executive Directors’ shareholdings ensure that they bear theconsequences of their management decisions; and▪ Executive Directors’ expenses are audited internally and reviewed byREMCO on a regular basis.Remuneration elementsBASE SALARYThe base salary rewards day-to-day leadership and direction as wellas holistic management of various internal and external stakeholders.ANNUAL BONUSREMCO uses the annual bonus to focus on short-term targets that theBoard agrees each year as part of the Business Plan, and on individualperformance against personal targets. A scorecard with financial,operational, project delivery and sustainable development targetsrepresents the link to business results. The scorecard targets arestretching but realistic. The scorecard for the year is set and approvedby REMCO. The outcome of the performance year is usually known inJanuary of the following year, and REMCO translates this into a scoreof between zero and two. In doing so, REMCO exercises its judgementto ensure that the final annual bonuses for Executive Directors are inline with Shell’s performance for the reported year.As was the case in 2011, for the 2012 Executive Directors’Scorecard, the sustainable development component was acombination of the safety measure (10% weight) and additionaltargeted internal measures (10% weight in total) covering operationalspills, energy efficiency and use of fresh water. These measures reflectsome of the most important sustainability issues faced by Shell and willalso be used for 2013.REMCO strengthens the Executive Directors’ individual accountabilityby increasing or decreasing their annual bonuses to take account ofhow well they have delivered against their own individualperformance targets. These targets typically relate to qualitativedifferentiators not already covered on the scorecard, for examplestakeholder management, portfolio development, organisationalleadership and brand value. A positive individual adjustmentcorresponds with personal impact beyond expectations and anegative adjustment would mean expectations were not completelymet.The calculation of an Executive Director’s annual bonus is:Annual bonus = base salary x target bonus % x scorecard result;adjusted for individual performance (and capped at 250% of salaryfor the Chief Executive Officer and 220% of salary for other ExecutiveDirectors).ANNUAL BONUS LEVELS (% OF SALARY)Target award MaximumChief Executive Officer 150% 250%Other Executive Directors 110% 220%LONG-TERM INCENTIVESThere are two main long-term incentive programmes currently in use:the Long-term Incentive Plan (LTIP) and the Deferred Bonus Plan (DBP).Another long-term incentive programme – the Restricted Share Plan(RSP) – is available for retention purposes.Long-term incentives focus on performance relative to other oil majors:BP, Chevron, ExxonMobil and Total. They reward Executive Directorsif Shell outperforms its peers over a three-year period on acombination of TSR, EPS growth on the basis of current cost of supplies(CCS), hydrocarbon production growth and net cash growth fromoperating activities.REMUNERATION REPORT

66 Shell Annual Report and Form 20-F 2012 reports.shell.comDirectors’ Remuneration Report > Remuneration policy for Executive DirectorsVested shares are increased by dividend shares accrued over theperformance period. Following payment of taxes, vested shares fromLTIP awards must be held for a further two years to align with thestrategic focus. REMCO always approves award dates in advance.2013 LONG-TERM INCENTIVE MEASURES FOREXECUTIVE DIRECTORS30% WEIGHT 20% WEIGHTLTIP AWARD LEVELS (% OF SALARY)MaximumTarget award[A] vestingChief Executive Officer 300% 600%Other Executive Directors 240% 480%[A] LTIP target awards cannot exceed four times base salary, as approved byshareholders in 2005.TIMELINE FOR 2013 LTIP SHARE AWARDSTSRAssessment of actual wealth createdfor shareholders.HYDROCARBON PRODUCTIONGROWTHOverall indicator of success inlocating and developing provedreserves and delivering production.Performance periodRetention periodFebruary AwardVestingRelease2013 2014 2015 2016 2017 201830% WEIGHT 20% WEIGHTEPS GROWTH (ON A CCSBASIS) [A]Indicator of the quality of revenuegrowth and cost management thatunderpins TSR.NET CASH GROWTH FROMOPERATING ACTIVITIESSource of dividends and capitalexpenditure commitments whichsupport sustainable growth based onportfolio and cost management.[A] Earnings per share on a CCS basis takes into account the changes in thecost of supplies and thereby enables a consistent comparison with other oilmajors. See Note 2 to the “Consolidated Financial Statements” for furtherinformation.For simplicity, we measure and rank growth based on the data pointsat the beginning of the three-year performance period relative to thedata points at the end of the period, using unadjusted publiclyreported data. These measures were introduced with the 2009 LTIPand DBP awards. Before 2009, TSR was the only performancemeasure.The LTIP and DBP vest on the basis of relative performance rankings asfollows:Deferred Bonus Plan Under the DBP, Executive Directors must invest atleast 25% of their annual bonus, up to a maximum of 50%, inRoyal Dutch Shell plc shares. These deferred bonus shares arereleased after three years, and may be matched with additionalshares. The number of additional shares awarded as a match willdepend on the performance of Shell compared with its peer groupduring the three-year deferral period. To calculate the number ofadditional shares, the same vesting percentage as the LTIP award isapplied to half of the Executive Directors’ deferred bonus shares. Aswith the LTIP award, the maximum vesting percentage that can beapplied is 200%, and the minimum is 0%. At the end of the threeyears, Executive Directors also receive shares equal to the value of anydividends that would have accrued during the period on the deferredbonus shares as well as any additional matching shares released. Theconsistent performance alignment of LTIP and DBP reinforces thecarried interest of Executive Directors with Shell and shareholders,using Company grants under the LTIP and earned cash under the DBP.TIMELINE FOR 2012 DEFERRED BONUS PLANPerformance periodfor annual bonusFebruary AwardDeferral periodRelease2012 2013 2014 2015 2016RELATIVE PERFORMANCE RANKINGSShell’s rank against peerson each of the fourperformance measures1st2nd3rd4th or 5thNumber of conditional performanceshares ultimately awarded, taking intoaccount the weightings of the fourperformance measures.2 x initial LTIP award2 x half of the deferred bonus shares1.5 x initial LTIP award1.5 x half of the deferred bonus shares0.8 x initial LTIP award0.8 x half of the deferred bonus sharesNilTSR underpin If the TSR ranking is fourth or fifth, the level of the awardthat can be vested on the basis of the three other measures will becapped at 50% of the maximum payout for the LTIP and half of thedeferred bonus shares for the DBP.Use of discretion REMCOconfirmsthatitwouldexerciseupwarddiscretion only after consulting shareholders.Restricted Share Plan In certain circumstances, three-year restrictedshare awards may be made under the Restricted Share Plan (RSP) forretention purposes. At the start of the year, there were no RSP awardsoutstanding for the current Executive Directors and no new awardswere made to them during the year.Employee share plans Executive Directors are not eligible toparticipate in other employee share plans (see page 46).Proration The annual bonus is prorated in the final year ofemployment. As of 2011, the LTIP awards are prorated on anExecutive Director’s departure on the basis of his service within theperformance period. The prorated awards will vest at the end of theperformance period, subject to satisfaction of performance conditions.REMCO retains the discretion to modify the prorating if it considersthat this would be appropriate.Dilution To deliver shares under these plans, we use market-purchasedshares rather than issue new shares. The dilution limit under thediscretionary plans is 5% in 10 years and, to date, no shareholderdilution has resulted from these plans, although it is permitted underthe rules of the plans.

eports.shell.com Shell Annual Report and Form 20-F 2012 67Directors’ Remuneration Report > Remuneration policy for Executive DirectorsPensionsExecutive Directors’ pensions are maintained in their base countrypension arrangements, as are those of other employees workinginternationally. Contribution rates for Executive Directors are the sameas for other employees under these plans. The pension accrual ratesare 1.8% (1/56) of base salary for each year of service for PeterVoser and 1.85% (1/54) for Simon Henry. Executive Directors’ eurobase salaries are translated into their home currencies for pensionplan purposes. Once their salaries are denominated in base countrycurrency, they are maintained in line with the euro base salaryincreases taking into account exchange rate fluctuations and otherfactorsasdeterminedbyREMCO.Contracts of employmentExecutive Directors’ employment contracts are governed by Dutchemployment law. This choice was made because mandatoryprovisions of Dutch employment law apply even if a foreign law hasbeen specified to govern the contract. This is consistent with theemployment terms of other Shell senior managers and staff based inthe Netherlands. The contracts end by notice of either party (onemonth for an employee and up to a maximum of four months for theemployer) or automatically at retirement. Under Dutch law, terminationpayments are not linked to the contract’s notice period.For current Executive Directors, REMCO will offer compensation forlosses resulting from termination of employment up to one times annualpay (base salary plus target bonus). For future Executive Directors, allnew contracts will include a cap of one times annual pay (base salaryplus target bonus) on any payments resulting from loss of employment,with a reference to the Executive Directors’ duty to seek alternativeemployment and thereby mitigate their loss. This level of terminationpayments was part of a number of policy changes supported byshareholders in 2011 following consultations.REMCO will determine terms and conditions for any situation where aseverance payment is appropriate, taking into considerationapplicable law, corporate governance provisions and the bestinterests of shareholders at the time. REMCO will ensure that poorperformance is not rewarded in such circumstances.External appointmentsThe Board considers external appointments to be valuable inbroadening Executive Directors’ knowledge and experience. Thenumber of outside directorships is generally limited to one. The Boardmust explicitly approve such appointments. Executive Directors areallowed to retain any cash or share-based compensation they receivefrom such external board directorships.EXECUTIVE DIRECTORS’ EMPLOYMENT CONTRACTSEmploying companyContract datePeter Voser Shell Petroleum N.V. July 20, 2005Simon Henry Shell Petroleum N.V. May 20, 2009Malcolm Brinded [A] Shell Petroleum N.V. July 20, 2005[A] Malcolm Brinded stood down as an Executive Director with effect fromApril 1, 2012. During April 2012 he transferred to employment in his basecountry of the UK where he was employed by Shell International Limiteduntil April 30, 2012, his last day of employment.EXTERNAL APPOINTMENTSTHOUSANDAppointee organisation2012 feeCHF £Peter Voser [A] Roche 330Malcolm Brinded [B] Network Rail 13[A] Appointed as a Non-executive Director as of March 1, 2011.[B] Appointed as a Non-executive Director as of October 12, 2010. Theamount shown has been prorated to show fees receivable during MalcolmBrinded’s period as an Executive Director of Royal Dutch Shell plc.REMUNERATION REPORT

68 Shell Annual Report and Form 20-F 2012 reports.shell.comDirectors’ Remuneration Report > Remuneration determinations for Executive DirectorsREMUNERATIONDETERMINATIONS FOREXECUTIVE DIRECTORSBase salaryREMCO reviewed Executive Directors’ annual base salary levels andmade the following decisions regarding salary adjustments.BASE SALARY OF EXECUTIVE DIRECTORS (UNAUDITED)€ thousand Increase Effective datePeter Voser 1,640 2.5% January 1, 2013Simon Henry 985 4.8% January 1, 2013In making salary adjustment determinations, REMCO considered:▪ the market positioning of the Executive Directors’ compensationpackages;▪ the different tenure and experience each Executive Director has in hisrole;▪ the planned average salary increase in 2013 for other employeesacross three major countries – the Netherlands, the UK and the USA;▪ the impact of pensionable salary increase on pension benefits; and▪ Shell’s performance and Executive Directors’ individual performancein 2012.Annual bonusSCORECARD RESULT SET AT 1.35In assessing Shell’s 2012 performance, REMCO noted that:▪ Net cash from operating activities was on target at $46 billion;▪ Operational excellence was above target:– project delivery was outstanding at 90%;– hydrocarbon production was substantially below target at3,262 thousand boe/d;– LNG sales were outstanding at 20.2 million tonnes; and– combined refinery and chemical plant availability was abovetarget at 92.9%.▪ Shell’s sustainability performance was in aggregate above target:– occupational safety, as measured by the total recordable casefrequency (TRCF), was on target at 1.3 cases per million workinghours; and– targeted internal measures covering volume of operational spills,use of fresh water, and energy intensity were better than target,whereas the number of operational spills was on target.REMCO considered overall performance and decided to follow themathematical outcome of the scorecard.More details on certain of these measures are provided in“Performance indicators” on pages 8-9.INDIVIDUAL PERFORMANCEAn Executive Director’s individual performance is also taken intoaccount in determining his annual bonus. Individual performance isassessed against personal targets.REMCO considered the individual performance of each ExecutiveDirector in 2012 and for Peter Voser and Simon Henry determined anupward adjustment of the bonus generated by the scorecard.Particular individual achievements during 2012 which supportedREMCO’s judgement are set out below.Chief Executive OfficerPeter Voser strongly led the strategy review and its implementation,including delivery of key projects following final investment decisions,which progressed well in all business units. The Company’s speed ofimplementation has accelerated, additional options were delivered inrespect of portfolio, and future option development expanded. Heactively drove portfolio management leading to initiatives to furthercommercialise the North American gas position, and to deepen theChina strategy. The Company’s senior leadership was furtherstrengthened, including key Executive Committee appointments, andgood progress was made in many areas of the sustainability agenda.Chief Financial OfficerSimon Henry was responsible for strong development of the overallfinancial operating agenda, executed a very effective delivery anddiscussion of the strategic plan, and initiated the creation of a newglobal IT vision. He further strengthened external relationships withinvestors and key stakeholders in Asia, and played a major role inbusiness performance appraisal and improvements on processstandardisation. Strong operational cash performance resulted inlower gearing levels, and a stronger balance sheet overall.2012 BONUSESBased on the scorecard outcome, the calculated 2012 bonus would be€3,240,000 for Peter Voser and €1,395,900 for Simon Henry. Asdescribed above, REMCO also took into account individualperformance and determined the final annual bonuses for 2012 as€3,300,000 for Peter Voser and €1,500,000 for Simon Henry. Forthe prorated period, REMCO determined €550,000 for MalcolmBrinded.2012 SCORECARD FOR EXECUTIVE DIRECTORSMeasures Weight ScoreOperational cash flow 30% 1.19Operational excellence 50% 1.44Project delivery 20% 2.00Production 12% 0.00Sales of liquefied natural gas 6% 2.00Refinery and chemical plant availability 12% 1.65Sustainable development 20% 1.35Safety 10% 1.13Additional sustainability measures [A] 10% 1.57Overall performance 100% 1.35BelowThreshold On target Above Outstanding0 0.40 0.80 1.20 1.60 2.00[A] Operational spills (volume and number), use of fresh water and energy intensity.

eports.shell.com Shell Annual Report and Form 20-F 2012 69Directors’ Remuneration Report > Remuneration determinations for Executive DirectorsOther cash and non-cash earningsExecutive Directors received car allowances and transport to and fromhome and office, as well as employer contributions to insurance plans.As appropriate for those employees outside their home country,additional amounts for children’s school fees were reimbursed, in linewith Shell’s International Mobility Policy. The Earnings of ExecutiveDirectors table is on page 71.Long-term Incentive PlanVesting In 2010, Executive Directors were granted a conditionalaward of performance shares under the LTIP. At the end of theperformance period, which was from January 1, 2010, toDecember 31, 2012, Shell was ranked second among its peer groupin terms of TSR, first in terms of EPS growth, second in terms ofhydrocarbonproductiongrowthandfirstintermsofgrowthinnetcashfrom operating activities. REMCO also considered the underlyingfinancial performance of Shell and decided to release 175% of sharesunder the LTIP, using no discretion.Award On February 28, 2013, a conditional award of performanceshares under the LTIP was made to the Executive Directors. The awardhad a face value of three times base salary for the Chief ExecutiveOfficer and 2.4 times base salary for the Chief Financial Officer,resulting in the following shares being awarded conditionally:AWARDED LTIP SHARESPeter VoserSimon Henry[A] Royal Dutch Shell plc A shares.[B] Royal Dutch Shell plc B shares.Number of sharesconditionally awarded195,393[A]91,920[B]For details of LTIP awards and releases see the Long-term IncentivePlan table on page 72.Deferred Bonus PlanVesting In 2010, Executive Directors were granted conditional awardsof matching shares under the DBP. The performance period wasJanuary 1, 2010, to December 31, 2012. Given that the performancecondition of the DBP is the same as for the 2010 LTIP, REMCO decidedto release 175% of the performance-related matching shares under theDBP.Award Peter Voser and Simon Henry elected to defer 50% of their2012 annual bonus into the DBP which was awarded on February 28,2013, resulting in share awards as follows:AWARDED DBP SHARESPeter VoserSimon Henry[A] Royal Dutch Shell plc A shares.[B] Royal Dutch Shell plc B shares.Number of deferred sharesawarded65,528[A]29,162[B]Half of the shares awarded are matchable with additionalperformance-related shares which can be earned on the same basis asthe LTIP vesting.For details of DBP awards and releases see the Deferred Bonus Plantable on page 73.Pension interestsDuring 2012, Peter Voser, Simon Henry and Malcolm Brindedaccrued retirement benefits under defined benefit plans. In addition tothe standard Swiss pension arrangements, Peter Voser has anunfunded pension arrangement that was agreed upon his return toShell in 2004 and implemented in 2006.For details of accrued pension benefits see page 74. The transfervalues have been calculated in accordance with regulations 7 to 7E ofthe Occupational Pension Schemes (Transfer Values)Regulations 1996.REMUNERATION REPORT

70 Shell Annual Report and Form 20-F 2012 reports.shell.comDirectors’ Remuneration Report > Non-executive Directors & Additional statutory disclosureNON-EXECUTIVE DIRECTORSRemuneration policyThe Board determines the fees payable to Non-executive Directors(NEDs) of the Company, within the limit of €4,000,000 specified bythe Articles of Association and in accordance with the NEDs’responsibilities and time commitments.The Board reviews NED fees periodically to ensure that they arealigned with those of other major listed companies. The Chairman’sfee is determined by REMCO. A review was undertaken during 2012and the Chairman’s fee was increased from €800,000 to €825,000.The Board reviewed the NED fees, which resulted in an increase in thebase annual fee from €120,000 to €125,000. These changes wereimplemented in January 2013.ADDITIONAL STATUTORYDISCLOSURECOMPENSATION OF DIRECTORS AND SENIOR MANAGEMENTShell paid and/or accrued a total amount of compensation of$83,028,000 [A] for services in all capacities that Directors andSenior Management at Shell provided during the year endedDecember 31, 2012 (2011: $85,692,000). In addition, Shellaccrued a total amount of $12,644,000 (excluding inflation), toprovide pension, retirement and similar benefits for Directors andSenior Management during the year ended December 31, 2012(2011: $9,236,000).[A] Compensation includes gains realised from long-term incentive awardsreleased and share options exercised during the year.NON-EXECUTIVE DIRECTORS’ FEES STRUCTURE(UNAUDITED) €Chairman of the Board 825,000Non-executive Director annual fee 125,000Senior Independent Director 55,000Audit CommitteeChairman [A] 45,000Member 25,000Corporate and Social Responsibility CommitteeChairman [A] 35,000Member 17,250Nomination and Succession CommitteeChairman [A] 25,000Member 12,000Remuneration CommitteeChairman [A] 35,000Member 17,250Intercontinental travel fee 5,000[A] The chairman of a committee does not receive an additional fee formembership of that committee.The Chairman and the other NEDs cannot receive awards under anyincentive or performance-based remuneration plans, and personalloans or guarantees are not granted to them. NEDs receive anadditional fee of €5,000 for any Board meeting involvingintercontinental travel – except for one meeting per year held in alocation other than The Hague. The earnings of the NEDs in officeduring 2012 can be found on page 75.NEDs do not accrue any retirement benefits as a result of their NonexecutiveDirectorships with the Company. During his service as anemployee, Jeroen van der Veer accrued retirement benefits and wasawarded share options as well as conditional shares under the LTIPand DBP. Relevant awards are summarised on pages 75-76. Thepolicy in respect of prorating LTIP and DBP awards on termination ofemployment came into effect for awards made from 2011 onwards.Biographies of the Directors and Senior Management are found onpages 52-55.PERFORMANCE GRAPHSThe graphs below compare, on the basis required by the UKCompanies Act 2006, Schedule 8 of the Large and Medium-sizedCompanies and Groups (Accounts and Reports) Regulations 2008, theTSR performance of Royal Dutch Shell plc over the past five financialyears with that of the companies comprising the Euronext 100 shareindex and the FTSE 100 share index.The Board regards the Euronext 100 and the FTSE 100 share indices asappropriate broad market equity indices for comparison, as they are theleading market indices in the home markets of Royal Dutch Shell plc.HISTORICAL TSR PERFORMANCE OF ROYAL DUTCH SHELL PLCA (RDSA) SHARESGrowth in the value of a hypothetical €100 holding over five years.Euronext 100 comparison based on 30 trading day average values.RDSA VERSUS EURONEXT 100Value of hypothetical €100 Holding€150€125€100€75€50Dec 07Dec 08Dec 09Dec 10Dec 11RDSAEuronext 100Dec 12HISTORICAL TSR PERFORMANCE OF ROYAL DUTCH SHELL PLCB (RDSB) SHARESGrowth in the value of a hypothetical £100 holding over five years.FTSE 100 comparison based on 30 trading day average values.RDSB VERSUS FTSE 100Value of hypothetical £100 Holding£150RDSBFTSE 100£125£100£75£50Dec 07Dec 08Dec 09Dec 10Dec 11Dec 12

eports.shell.com Shell Annual Report and Form 20-F 2012 71Directors’ Remuneration Report > Data tables – Executive DirectorsDATA TABLES – EXECUTIVEDIRECTORSEARNINGS OF EXECUTIVE DIRECTORS IN OFFICE DURING 2012 (AUDITED)€ THOUSANDPeter Voser Simon Henry Malcolm Brinded2012 2011 2012 2011 2012 2011Salary 1,600 1,550 940 890 300 1,175Bonus [A] 3,300 3,500 1,500 1,500 550 2,000Cash benefits [B] 183 155 20 50 2,520 1Non-cash benefits [C] 3 3 42 29 28 38Total in euros 5,086 5,208 2,502 2,469 3,398 3,214Total in dollars 6,539 7,249 3,217 3,436 4,370 4,473Total in sterling 4,126 4,521 2,030 2,143 2,758 2,790[A] The annual bonus figures are shown in the table in their related performance year and not in the following year in which they are paid.[B] Cash benefits include employer contributions to insurance plans, school fees, car allowances, tax compensation and the severance payment specific toMalcolm Brinded. Separately, as disclosed in the 2011 Directors’ Remuneration Report, following his relocation to the Netherlands in 2002, Malcolm Brindedreceived an indemnity on the house that Shell requested him to purchase in the Netherlands. The indemnity entailed that, should a Shell-initiated transfer resultin the sale of this property at a loss (defined as a sale price below the original purchase price of €3,375,532), Shell would compensate him for such loss.Malcolm Brinded returned to the UK in April 2012 and marketed the property. In November 2012, Shell purchased the property for €2,383,333 (calculatedas the average of three independent valuations). Since this was lower than the original purchase price, Shell made a payment to Malcolm Brinded of€992,199 to compensate him for the difference between the final sale price and the original purchase price which, when grossed up for tax, amounted to€2,067,248.[C] Non-cash benefits comprise life and medical insurance, company-provided transport for home to office commuting, relocation costs, and lease cars.The aggregate amount paid to or receivable by Executive Directorsfrom Royal Dutch Shell plc and its subsidiaries for services in allcapacities during the fiscal year ended December 31, 2012, was€13,043,000 (2011: €10,891,000).REMUNERATION REPORT

72 Shell Annual Report and Form 20-F 2012 reports.shell.comDirectors’ Remuneration Report > Data tables – Executive DirectorsLONG-TERM INCENTIVE PLANAuditedUnauditedNumber of sharesunder award as atJanuary 1, 2012[A]OriginalawardDividendsharesaccruedin prioryears[B]Marketprice atdate ofawardDividendsharesaccruedduring theyear[B]Additionalsharesawarded/(lapsed)during theyear[C]Numberof sharesreleasedduring theyearValue ofshares atrelease(thousand)[D]Total number ofshares underaward as atDecember 31,2012Potential value as atDecember 31,2012 (thousand)[E]Ashares € € € $Peter Voser2012-2014 175,985 – 27.28 9,000 – – – 184,985 4,805 6,3412011-2013 182,174 8,907 25.53 9,772 – – – 200,853 6,156 8,1242010-2012 [F] 227,560 24,878 19.78 12,910 – – – 265,348 12,062 15,9172009-2011 128,074 23,162 19.40 1,060 (60,494) 91,802 2,468 – – –Bshares £ £ £ $Simon Henry2012-2014 81,699 – 22.95 4,055 – – – 85,754 1,865 3,0152011-2013 84,047 4,088 21.45 4,375 – – – 92,510 2,374 3,8382010-2012 [F] 107,541 11,973 16.56 5,932 – – – 125,446 4,775 7,7192009-2011 [G] 26,000 4,248 15.40 595 21,176 52,019 1,178 – – –Malcolm Brinded2012-2014 [H] 104,296 – 22.95 1,726 (69,531) – – 36,491 794 1,2832011-2013 [H] 110,961 5,397 21.45 3,851 (38,786) – – 81,423 2,090 3,3782010-2012 [F][H] 148,660 16,551 16.56 8,200 – – – 173,411 6,600 10,6702009-2011 153,855 28,356 16.58 1,265 (72,883) 110,593 2,504 – – –[A] The 2012 award was made on February 3, 2012. (See pages 65-66 for more details about LTIP performance conditions.)[B] Dividend shares are performance-related and accumulate each year on an assumed notional LTIP award. Such dividend shares are disclosed and recorded onthe basis of the number of shares conditionally awarded but, when an award vests, dividend shares will be awarded only in relation to vested shares as if thevested shares were held from the award date.[C] The vesting of the 2009 LTIP award at 60% meant that 40% of the shares originally awarded to Peter Voser and Malcolm Brinded have lapsed. The vesting ofthe 2009 Performance Share Plan (PSP) award at 170% for Simon Henry meant that additional shares were released at vesting. The outstanding 2011 and2012 LTIP awards for Malcolm Brinded have been prorated for service on his termination of employment on April 30, 2012. This prorating resulted in thelapsing of previously awarded shares.[D] The vested awards were delivered on March 21, 2012. The respective share prices used to calculate the values at release were €26.89 for Peter Voser and£22.65 for Simon Henry and Malcolm Brinded, which were the closing prices of the previous trading day on Euronext Amsterdam for Royal Dutch Shell plcA shares and on the London Stock Exchange for Royal Dutch Shell plc B shares.[E] Representing the value of the conditional shares awarded in previous years under the LTIP at the end of the year. This is calculated by multiplying the marketprice of Royal Dutch Shell plc shares at December 31, 2012, by the number of shares under the LTIP that would vest based on the achievement of LTIPperformance conditions up to December 31, 2012. (See pages 65-66 for more details about LTIP performance conditions.)[F] On March 12, 2013, REMCO determined to vest 175% of shares for the 2010 award (see page 69). The vesting percentage is applied to the total number ofshares awarded on February 5, 2010. The resulting number of shares has been increased by notional dividends accrued between award date and vestingdate (as if this resulting number of shares had been in place from award date).[G] Awarded under the PSP prior to appointment as an Executive Director. More information about the PSP can be found on pages 132-133.[H] The total number of shares under award as at cessation of appointment as an Executive Director on March 31, 2012, was 167,181 for the 2010 award,117,745 for the 2011 award, and 105,539 for the 2012 award.

eports.shell.com Shell Annual Report and Form 20-F 2012 73Directors’ Remuneration Report > Data tables – Executive DirectorsDEFERRED BONUS PLAN (AUDITED)Number of sharesunder award as atJanuary 1, 2012[B]Number ofNonperformancerelatedDividendDividendshares PerformancerelatedDividendsharesaccrued on NumberTotalnumber ofshares matching shares Market accruedperformance-of shares Value of Realised shares underdeferredfrom thesharesawardedaccruedin priorprice atdate ofduringthematchingsharesrelatedmatchingreleasedduring theshares atreleasegains ondeferralaward as atDecember 31,Awards [A]bonus[C] at grant years[D] award year[D] vested shares[E] year (thousand)[F] (thousand)[G] 2012Ashares € € €Peter Voser2012-2014 64,161 – – 27.28 3,282 – – – – – 67,4432011-2013 73,457 – 3,591 25.53 3,941 – – – – – 80,9892010-2012 [H] 47,121 – 5,151 19.78 2,674 – – – – – 54,9462009-2011 36,687 9,171 8,294 19.40 632 8,254 1,609 64,647 1,738 1,026 –Bshares £ £ £Simon Henry2012-2014 27,160 – – 22.95 1,348 – – – – – 28,5082011-2013 30,238 – 1,470 21.45 1,574 – – – – – 33,2822010-2012 [H] 17,607 – 1,960 16.56 972 – – – – – 20,539Malcolm Brinded2012-2014 [I] 36,214 – – 22.95 1,797 – – – – – 38,0112011-2013 [I] 45,289 – 2,203 21.45 2,357 – – – – – 49,8492010-2012 [H][I] 37,474 – 4,172 16.56 2,067 – – – – – 43,7132009-2011 44,073 11,018 10,153 16.58 755 9,916 1,966 77,881 1,764 1,033 –[A] Awards made in 2010, 2011 and 2012 refer to the portion of the 2009, 2010 and 2011 annual bonus respectively, which was deferred, and the relatedaccrued dividends and matching shares.[B] The 2012 award was made on February 3, 2012.[C] Representing the proportion of the annual bonus that has been deferred and converted into notional share entitlements (deferred bonus shares), in whichthereis no beneficial ownership. Half of the shares awarded are matchable with additional performance-related shares, which can be earned on the same basis asthe LTIP vesting. The value of the deferred bonus shares awarded for 2012 is also included in the annual bonus figures in the Earnings of Executive Directorstable on page 71.[D] Representing dividends accumulated since the award on the number of shares equal to the deferred bonus shares awarded.[E] Dividend shares are performance-related and accumulate each year on an assumed notional DBP award. When an award vests, dividend shares will beawarded only in relation to vested shares as if the vested shares were held from the award date.[F] The vested awards were delivered on March 21, 2012. The respective share prices used to calculate the values at release were €26.89 for Peter Voser and£22.65 for Malcolm Brinded, which were the closing prices of the previous trading day on Euronext Amsterdam for Royal Dutch Shell plc A shares and on theLondon Stock Exchange for Royal Dutch Shell plc B shares.[G] Representing the difference between the value of shares released and bonus deferred. Peter Voser and Malcolm Brinded each deferred 50% of their 2008annual bonus.[H] On March 12, 2013, REMCO decided to vest 175% of the performance-related matching shares relating to the 2010 award. The total vested award(comprising the original deferred bonus award plus the matching award) has been increased by the notional dividends accrued between the award date andthe vesting date (see page 69).[I] The total number of shares under award at cessation of appointment as an Executive Director on March 31, 2012, was 42,143 for the 2010 award, 48,054for the 2011 award, and 36,646 for the 2012 award.REMUNERATION REPORT

74 Shell Annual Report and Form 20-F 2012 reports.shell.comDirectors’ Remuneration Report > Data tables – Executive DirectorsSHARE OPTIONS (AUDITED)RealisedNumber ofoptions underaward as atJanuary 1,2012Number ofoptionsexercisedduring theyearNumber ofoptions underaward as atDecember 31,2012Grantprice [A]Exercisablefrom date Expiry dateRealisablegainsasatDecember 31,2012(thousand) [B]gains on shareoptionsexercisedduring the year(thousand)Ashares € € $ € $Malcolm Brinded [C] 50,000 – – 31.05 21/03/05 20/03/12 – – – –Bshares £ £ $ £ $Peter Voser 229,866 – 229,866 15.04 05/11/07 04/11/14 1,544 2,495 – –Simon Henry [D] 22,728 22,728 – 12.74 19/03/06 18/03/13 – – 235 37132,583 – 32,583 13.89 07/05/07 06/05/14 256 414 – –Malcolm Brinded [E] 229,866 229,866 – 13.89 07/05/07 06/05/14 – – 1,825 2,925[A] Average of the opening and closing share prices over a period of five successive trading days prior to and including the day on which the options are granted(not at a discount).[B] Representing the value of unexercised share options granted in previous years at the end of the year, calculated by taking the difference between the grantprice of the option and the market price of Royal Dutch Shell plc shares at December 31, 2012, multiplied by the number of shares under option atDecember 31, 2012. The actual gain realised, if any, will depend on the market price of Royal Dutch Shell plc shares at the time of exercise.[C] These share options expired unexercised during the year.[D] Awarded to Simon Henry prior to his appointment as an Executive Director. Simon Henry exercised 22,728 share options on August 22, 2012. The marketprice at the date of exercise was £23.08.[E] Malcolm Brinded had 229,866 share options under award as at the date he stood down as an Executive Director on March 31, 2012. He exercised theseshare options on April 2, 2012. The market price at the date of exercise was £21.82.The 2012 high, low and year-end prices of Royal Dutch Shell plcA and B shares are set out on page 92.PENSIONS (AUDITED)THOUSANDAccrued pensionAt December 31, 2012Increase over the yearIncrease over the year(excluding inflation)CHF $ CHF $ CHF $Peter Voser [A][D] 1,312 1,434 57 63 57 63£ $ £ $ £ $Simon Henry [B][D] 386 623 33 53 22 35Malcolm Brinded [B][C][D] 666 1,076 24 39 5 7PENSIONS (AUDITED)THOUSANDTransfer values of accrued benefitsIncrease in accruedAt December 31, 2012 At December 31, 2011Increase over the yearless Directors’contributionspension over the year(excluding inflation) lessDirectors’ contributionsCHF $ CHF $ CHF $ CHF $Peter Voser [A] 17,758 19,406 15,665 16,647 2,017 2,204 702 767£ $ £ $ £ $ £ $Simon Henry [B] 9,058 14,643 8,270 12,748 748 1,209 476 770Malcolm Brinded [B][C] 17,487 28,269 17,260 26,606 227 367 104 168[A] The pension values for Peter Voser include all of his Shell pension benefits. This includes a capped defined benefit pension in the Swiss pension fund based onsalary up to a cap of CHF 835,200 per annum and benefits for salary in excess of this level provided via an individual savings account and an unfundedpension promise. As at December 31, 2012, his capped defined benefit pension was CHF 435,141 per annum, and the transfer value in respect of thisbenefit was CHF 5,889,201. The individual savings account was worth CHF 2,581,175 at December 31, 2012. The balance of his benefits (valued atCHF 9,287,315 at December 31, 2012) will be provided through the unfunded pension arrangement.[B] Simon Henry and Malcolm Brinded elected to have their benefits in the Shell Contributory Pension Fund (the main UK pension arrangement) restricted totheUK applicable lifetime allowance with any excess provided from an unfunded defined benefit scheme (the Shell Supplementary Pension Plan). While SimonHenry is, and Malcolm Brinded was, working outside of the UK, in line with Shell’s general pension policy, their benefits are provided by the Shell OverseasContributory Pension Fund rather than the Shell Contributory Pension Fund. The values of the accrued pension benefits in each plan are aggregated in thetable, and not disclosed separately.[C] Malcolm Brinded elected to receive his retirement benefits on April 30, 2012, and commuted £120,228 per annum of his pension for a lump sum of£2,208,949. The pension amounts shown do not allow for this effect for consistency between the start-of-year and end-of-year pension figures. The transfervalue at December 31, 2012, is based on Malcolm Brinded’s post-commutation pension but has then been increased to add in the value of the lump sum andthe pension payments (which amounted to £363,520) he received during 2012.[D] Employer contributions to pension plans in respect of Executive Directors were €848,143 in 2012 (2011: €1,161,641).

eports.shell.com Shell Annual Report and Form 20-F 2012 75Directors’ Remuneration Report > Data tables – Non-executive DirectorsDATA TABLES – NON-EXECUTIVEDIRECTORSFEES OF NON-EXECUTIVE DIRECTORS IN OFFICE DURING 2012 (AUDITED)THOUSAND2012[D] 2011Non-executive Directors € $ € $Josef Ackermann 145 186 137 191Guy Elliot 165 212 157 219Charles O. Holliday 207 266 196 272Lord Kerr of Kinlochard [A] 80 103 214 297Gerard Kleisterlee 145 186 145 202Christine Morin-Postel 145 186 153 212Jorma Ollila [B] 800 1,029 800 1,112Sir Nigel Sheinwald [C] 69 88 – –Linda G. Stuntz 175 225 95 131Jeroen van der Veer 137 176 137 191Hans Wijers 200 258 162 226[A] Lord Kerr of Kinlochard stood down with effect from May 22, 2012.[B] Jorma Ollila receives no additional payments for chairing the Nomination and Succession Committee. He has the use of an apartment and company-providedtransport between home and office. The total value of his non-cash benefits amounted to approximately €121,000. Accordingly, his total fees and non-cashbenefits for 2012 were €921,000 (2011: €864,000).[C] Sir Nigel Sheinwald was appointed with effect from July 1, 2012.[D] In 2012, the total amount of fees and non-cash benefits received by NEDs was €2,389,000 (2011: €2,259,000).Jeroen van der Veer’s long-term incentive andpension interestsThe following tables show the LTIP, DBP, share option and pensioninterests of Jeroen van der Veer. All awards listed below were grantedwhen Jeroen van der Veer was an Executive Director.LONG-TERM INCENTIVE PLAN (AUDITED)2009 to 2011Number of A shares under award as at January 1, 2012 365,305Original award 309,358Dividend shares accrued in prior years 55,947Market price at date of award €19.40Dividend shares accrued during the year [A] 2,560Additional shares awarded/(lapsed) during the year [B] (146,121)Number of shares released during the year 221,744Value of shares at release (thousands) [C] €5,962Total number of shares under award as at December 31, 2012 –REMUNERATION REPORT[A] Dividend shares are performance-related and accumulate each year at an assumed notional LTIP award. Such dividend shares are disclosed and recorded onthe basis of the number of shares conditionally awarded but, when an award vests, dividend shares will be awarded only in relation to vested shares as if thevested shares were held from the award date.[B] The vesting of the 2009 LTIP award at 60% meant that 40% of the shares originally awarded have lapsed.[C] The vested awards were delivered on March 21, 2012. The share price used to calculate the value at release was €26.89, which was the closing price of theprevious trading day on Euronext Amsterdam for Royal Dutch Shell plc A shares.

76 Shell Annual Report and Form 20-F 2012 reports.shell.comDirectors’ Remuneration Report > Data tables – Non-executive DirectorsDEFERRED BONUS PLAN [A] (AUDITED)2009 to 2011Number of A shares under award as at January 1, 2012 142,696Number of shares deferred from the bonus [B] 96,674Non-performance-related matching shares awarded at grant 24,168Dividend shares accrued in prior years [C] 21,854Market price at date of award €19.40Dividend shares accrued during the year [C] 1,667Performance-related matching shares vested during the year 21,751Dividend shares accrued on the performance-related matching shares [D] 4,236Number of shares released during the year 170,350Value of shares at release (thousand) [E] €4,580Realised gains on deferral (thousand) [F] €2,705Total number of shares under award as at December 31, 2012 –[A] Awards made in 2009 refer to the portion of the 2008 annual bonus which was deferred, and the related accrued dividends and matching shares.[B] Representing the proportion of the annual bonus that has been deferred and converted into notional share entitlements (deferred bonus shares), in whichthereis no beneficial ownership.[C] Representing dividends accumulated since the award on the number of shares equal to the deferred bonus shares awarded.[D] Dividend shares are performance-related and accumulate each year on an assumed notional DBP award. When an award vests, dividend shares will beawarded only in relation to vested shares as if the vested shares were held from the award date.[E] The vested awards were delivered on March 21, 2012. The share price used to calculate the value at release was €26.89, which was the closing price of theprevious trading day on Euronext Amsterdam for Royal Dutch Shell plc A shares.[F] Representing the difference between the value of shares released and the bonus deferred.SHARE OPTIONS (AUDITED)ASHARESAwarded 2002 2003 2004Number of options under award as at January 1, 2012 105,000 300,000 300,000Number of options exercised during the year – 300,000[B] –Realised gains on share options exercised during the year (thousand) – €2,792 –Number of options expired during the year 105,000 – –Number of options under award as at December 31, 2012 – – 300,000Grant price [A] €31.05 €18.41 €20.65Exercisable from date 21/03/05 19/03/06 07/05/07Expiry date 20/03/12 18/03/13 06/05/14[A] The grant price is the average of the opening and closing share prices over a period of five successive trading days prior to and including the day on whichthe options are granted (not at a discount).[B] Jeroen van der Veer exercised 150,000 share options on February 13, 2012, and 150,000 share options on July 31, 2012. The market prices at the dates ofexercise were €27.55 for 50,000 and €27.45 for 100,000 on February 13, 2012, and €27.94 on July 31, 2012.PENSIONS [A] (AUDITED)THOUSANDAt December 31, 2012Increase over the yearIncrease/(decrease) over the year(excluding inflation)€ $ € $ € $Accrued pension 1,569 2,070 0 0 (30) (40)At December 31, 2012 At December 31, 2011 Increase over the yearIncrease/(decrease) in accruedpension over the year(excluding inflation)€ $ € $ € $ € $Transfer value of accruedbenefits 27,232 35,936 26,919 34,788 313 413 (581) (767)[A] Jeroen van der Veer is a pensioner. The pension payments made to him during 2012 amounted to approximately €1,569,000. The accrued pension,excluding the impact of inflation, shows a decrease as Dutch price inflation was higher than the pension increase granted in the Dutch pension fund during theyear. The transfer value shows an increase largely due to a decrease in the discount rate and addition of interest, partially offset by payments made in theyear.Signed on behalf of the Board/s/ Michiel BrandjesMichiel BrandjesCompany SecretaryMarch 13, 2013

eports.shell.com Shell Annual Report and Form 20-F 2012 77Corporate governanceCORPORATE GOVERNANCEDear Shareholders,I am pleased to introduce this report which describes our governancearrangements and explains how they were operated during the year.We are committed to the highest standards of corporate governanceand believe that such standards are essential to business integrity,performance and maintaining investors’ trust.We fully embrace the view that good corporate governance facilitateseffective, entrepreneurial and prudent management that can deliverthe long-term success of the Company. As a company with a premiumlisting on the London Stock Exchange, we are required to reportagainst the 2010 UK Corporate Governance Code, and I am pleasedto say that we were fully compliant in 2012.As Chairman, I regard the issue of Board succession as very importantand during the year we have been busy dealing with a number of newappointments and succession issues. Following the retirement of LordKerr of Kinlochard at the 2012 Annual General Meeting (AGM), HansWijers was appointed Deputy Chairman and Senior IndependentDirector, and we were delighted to appoint Sir Nigel Sheinwald andGerrit Zalm as Non-executive Directors with effect from July 2012 andJanuary 2013 respectively. During the year we also undertook areview of the membership of the four Board committees and made anumber of changes.The Board and the Nomination and Succession Committee are verymindful of the importance of diversity within the Boardroom in generaland believe that maintaining an appropriate balance of experience,skills, knowledge and background is key to effective Boardperformance. It believes gender diversity is an important element ofthis mix and we have stated our aim that by 2015 at least 25% of theDirectors will be women. This is in line with the recommendations ofthe report by Lord Davies of Abersoch entitled “Women on Boards”(Davies Report).I am also mindful of my responsibility to ensure that the views ofshareholders are communicated to the Board and my obligation tomaintain a dialogue with major shareholders, particularly on suchmatters as governance and strategy. I regard this as critical todeveloping trust and confidence, and to this end I meet regularly withmajor shareholders, sometimes with senior members of themanagement team or other Non-executive Directors of the Board. Ibelieve this to be mutually beneficial to the Company and investorsalike.Looking forward, we will continue to strive for the highest standards ofcorporate governance since we believe this will help lead to thecontinued success of the Company.Jorma OllilaChairmanMarch 13, 2013Statement of ComplianceThe Board confirms that throughout the year the Company has appliedthe main principles and complied with the relevant provisions set out inthe 2010 UK Corporate Governance Code (the Code) [A]. In additionto complying with applicable corporate governance requirements inthe UK, the Company must follow the rules of Euronext Amsterdam aswell as Dutch securities laws because of its listing on this exchange.The Company must likewise follow US securities laws and the NewYork Stock Exchange (NYSE) rules and regulations because itssecurities are registered in the USA and listed on the NYSE.[A] In September 2012, the Financial Reporting Council issued an update to the2010 UK Corporate Governance Code which applies to accounting periodsbeginning on or after October 1, 2012.NYSE governance standardsIn accordance with the NYSE rules for foreign private issuers, theCompany follows home-country practice in relation to corporategovernance. However, foreign private issuers are required to have anaudit committee that satisfies the requirements of the U.S. Securitiesand Exchange Commission’s Rule 10A-3. The Company’s AuditCommittee satisfies such requirements. The NYSE also requires aforeign private issuer to provide certain written affirmations andnotices to the NYSE, as well as a summary of the ways in which itscorporate governance practices differ significantly from those followedby domestic US companies under NYSE listing standards. TheCompany’s summary of its corporate governance differences is givenbelow and can be found at www.shell.com/investor.NON-EXECUTIVE DIRECTOR INDEPENDENCEThe Board follows the provisions of the Code in respect of NonexecutiveDirector independence, which states that at least half of theBoard, excluding the Chairman, should comprise Non-executiveDirectors determined by the Board to be independent. In the case ofthe Company, the Board has determined that all the Non-executiveDirectors are wholly independent with the exception of Jeroen van derVeer who served as Chief Executive until his retirement from that roleon June 30, 2009 (see pages 78-79 for more information).NOMINATING/CORPORATE GOVERNANCE COMMITTEE ANDCOMPENSATION COMMITTEEThe NYSE listing standards require that a listed company maintain anominating/corporate governance committee and a compensationcommittee, both composed entirely of independent directors and withcertain specific responsibilities. The Company’s Nomination andSuccession Committee and Remuneration Committee, respectively,comply with these requirements, except that the terms of reference ofthe Nomination and Succession Committee require only a majority ofthe committee members to be independent.AUDIT COMMITTEEAs required by NYSE listing standards, the Company maintains anAudit Committee for the purpose of assisting the Board’s oversight ofits financial statements, its internal audit function and its independentauditors. The Company’s Audit Committee is in full compliance withthe U.S. Securities and Exchange Commission’s Rule 10A-3 andSection 303A.06 of the NYSE Listed Company Manual. However, inaccordance with English law, the Company’s Audit Committee makesCORPORATE GOVERNANCE

78 Shell Annual Report and Form 20-F 2012 reports.shell.comCorporate governancerecommendations to the Board for it to put to shareholders forapproval in general meeting regarding the appointment,reappointment and removal of independent auditors. Consequently,the Company’s Audit Committee is not directly responsible for theappointment of independent auditors.SHAREHOLDER APPROVAL OF SHARE-BASED COMPENSATIONPLANSThe Company complies with the listing rules of the UK Listing Authority(UKLA) which require shareholder approval for the adoption of sharebasedcompensation plans which are either long-term incentiveschemes in which Directors can participate or schemes which mayinvolve the issue of new shares. Under the UKLA rules, such planscannot be changed to the advantage of participants withoutshareholder approval, except for certain minor amendments, forexample to benefit the administration of the plan or to take account oftax benefits. The rules on the requirements to seek shareholderapproval for share-based compensation plans, including those inrespect of material revisions to such plans, may deviate from the NYSElisting standards.CODE OF ETHICSThe NYSE listing standards require that listed companies adopt a codeof business conduct and ethics for all directors, officers and employeesand promptly disclose any waivers of the code for directors orexecutive officers. The Company has adopted the Shell GeneralBusiness Principles (see below), which satisfy the NYSE requirements.The Company also has internal procedures in place by which anyemployee can raise in confidence accounting, internal accountingcontrols and auditing concerns. Additionally, any employee can reportirregularities to management through a worldwide dedicatedtelephone line and website without jeopardising his or her position(see below).Shell General Business PrinciplesThe Shell General Business Principles define how Shell subsidiaries areexpected to conduct their affairs. These principles include, amongother things, Shell’s commitment to support fundamental human rightsin line with the legitimate role of business and to contribute tosustainable development. They can be found at www.shell.com/sgbp.Shell Code of ConductDirectors and employees are required to comply with the Shell Code ofConduct, which is intended to help them put Shell’s business principlesinto practice. This code clarifies the basic rules and standards they areexpected to follow and the behaviour expected of them. It can befound at www.shell.com/codeofconduct.Code of EthicsExecutive Directors and Senior Financial Officers of Shell must alsocomply with a Code of Ethics. This code is specifically intended tomeet the requirements of Section 406 of the Sarbanes-Oxley Act andthe listing requirements of the NYSE (see above). It can be found atwww.shell.com/codeofethics.Shell Global HelplineEmployees, contract staff and third parties with whom Shell has abusiness relationship (such as customers, suppliers and agents) mayraise ethics and compliance concerns through the Shell GlobalHelpline. This is a worldwide confidential reporting mechanism,operated by an external third party, which is open 24 hours a day,seven days a week through local telephone numbers and atwww.shell.com or www.compliance-helpline.com/shell.Board structure and compositionDuring 2012, the Board comprised the Chairman, Jorma Ollila; twoExecutive Directors including the Chief Executive Officer, except forthe period from January 1 to March 31 when there were threeExecutive Directors; and nine Non-executive Directors, including theDeputy Chairman and Senior Independent Director, except for theperiod from May 23 to June 30 when there were eight Non-executiveDirectors.At the 2012 Annual General Meeting (AGM) on May 22, 2012, LordKerr of Kinlochard stood down as a Non-executive Director and SirNigel Sheinwald was appointed as a Non-executive Director witheffect from July 1, 2012. Hans Wijers succeeded Lord Kerr as DeputyChairman and Senior Independent Director.A list of current Directors, including their biographies, is given onpages 52-54.The Board recognises its collective responsibility for the long-termsuccess of the Company. It meets eight times a year and has a formalschedule of matters reserved to it. This includes: overall strategy andmanagement; corporate structure and capital structure; financialreporting and controls, including approval of the Annual Report andForm 20-F and interim dividends; risk management and internalcontrols; significant contracts; and succession planning and newBoard appointments. The full list of matters reserved to the Board fordecision can be found at www.shell.com/investor.Role of DirectorsThe roles of the Chairman, a non-executive role, and the ChiefExecutive Officer are separate, and the Board has agreed theirrespective responsibilities.The Chairman, Jorma Ollila, is responsible for the leadership andmanagement of the Board and for ensuring that the Board and itscommittees function effectively. One way in which this is achieved isby ensuring Directors receive accurate, timely and clear information.He is also responsible for agreeing and regularly reviewing thetraining and development needs of each Director (see “Induction andtraining” on page 79) which he does with the assistance of theCompany Secretary.The Chief Executive Officer, Peter Voser, bears overall responsibilityfor the implementation of the strategy agreed by the Board, theoperational management of the Company and the business enterprisesconnected with it. He is supported in this by the Executive Committee,which he chairs (see page 80).Non-executive DirectorsNon-executive Directors are appointed by the Board or byshareholders in general meeting and, in accordance with the Code,must seek re-election by shareholders on an annual basis. Their letterof appointment refers to a specific term of office, such term beingsubject to the provisions of the Code and the Company’s Articles ofAssociation (the Articles). Upon appointment, Non-executive Directorsconfirm they are able to allocate sufficient time to meet theexpectations of the role. Appointments are subject to three months’notice and there is no compensation provision for early termination.The Non-executive Directors bring a wide range and balance of skillsand international business experience to Shell. Through theircontribution to Board meetings and to the Board’s committee meetings,they are expected to challenge constructively and help develop

eports.shell.com Shell Annual Report and Form 20-F 2012 79Corporate governanceproposals on strategy and bring independent judgement on issues ofperformance and risk. The Chairman and the Non-executive Directorsmeet routinely without the Executive Directors to discuss, among otherthings, the performance of individual Directors. A number of NonexecutiveDirectors also meet major shareholders from time to time.The role of the Senior Independent Director is to provide a soundingboard for the Chairman and to serve as an intermediary for the otherDirectors when necessary. The Senior Independent Director isavailable to shareholders if they have concerns that contact throughthe normal channels of Chairman, Chief Executive Officer or otherExecutive Directors has failed to resolve or for which such contact isinappropriate.All the Non-executive Directors as at the end of 2012 are consideredby the Board to be wholly independent, with the exception of Jeroenvan der Veer, who served as Chief Executive until his retirement fromthat role on June 30, 2009. He will stand down as a Non-executiveDirector at the close of business of the 2013 AGM. The standard bywhich Directors’ independence is determined can be found atwww.shell.com/investor within the terms of reference of theNomination and Succession Committee.Conflicts of interestCertain statutory duties with respect to directors’ conflicts of interestare in force under the Companies Act 2006 (the Act). In accordancewith the Act and the Articles, the Board may authorise any matter thatotherwise may involve any of the Directors breaching his or her duty toavoid conflicts of interest. The Board has adopted a procedure toaddress these requirements. It includes the Directors completingdetailed conflict of interest questionnaires. The matters disclosed in thequestionnaires are reviewed by the Board and, if consideredappropriate, authorised in accordance with the Act and the Articles.Conflictsofinterestaswellasanygiftsandhospitalityreceivedbyandprovided by Directors are kept under review by the Board.Significant commitments of the ChairmanThe Chairman’s other significant commitments are given in hisbiography on page 52.Independent professional adviceAll Directors may seek independent professional advice in connectionwith their role as a Director. All Directors have access to the adviceand services of the Company Secretary. The Company has provided tothe Directors indemnities and directors’ and officers’ insurance inconnection with the performance of their responsibilities. Copies ofthese indemnities and the directors’ and officers’ insurance policiesare open to inspection. Copies of these indemnities have beenpreviously filed with the U.S. Securities and Exchange Commission(SEC) and are incorporated by reference as an exhibit to this Report.Board activities during the yearThe Board met eight times during the year. Seven of the meetings wereheld in The Hague, the Netherlands, and one meeting was held inPerth, Australia. The agenda for each meeting included a number ofregular items, including reports from each of the Board committeesand from the Chief Executive Officer, the Chief Financial Officer andthe other members of the Executive Committee. At most meetings theBoard also considered a number of investment, divestment andfinancing proposals. During the year, the Board considered numerousstrategic issues and approved each of the quarterly, half-year and fullyearfinancial results and dividend announcements. Specific attentionin 2012 was paid to our shipping activities, matters and projects inAlaska, Australia and Nigeria, asset integrity and process safety, CO 2management, project delivery and operational excellence, riskmanagement and control, and safety and environmental performance.The Board received reports and presentations on all these subjectswhich it discussed and considered.The Board also received regular reports from the various functions,including Corporate (which includes Human Resources, Health andSecurity), Finance (which includes Investor Relations) and Legal.Induction and trainingFollowing appointment to the Board, Directors receive a comprehensiveinduction tailored to their individual needs. This includes site visits andmeetings with senior management to enable them to build up a detailedunderstanding of Shell’s business and strategy, and the key risks andissues with which they are faced. In the case of Sir Nigel Sheinwald,who was appointed during the year, site visits were arranged to Shelloperations in Australia; Rotterdam, the Netherlands; Nigeria;Aberdeen, UK; and Port Arthur, USA. In addition, visits were arrangedto research and development facilities in Amsterdam and Rijswijk, theNetherlands, the Company’s headquarters in The Hague and theregistered office at Shell Centre, London.Throughout the year, regular updates on developments in legalmatters, governance and accounting are provided to Directors. TheBoard regards site visits as an integral part of ongoing Directortraining. Additional training is available so that Directors can updatetheir skills and knowledge as appropriate.Attendance at Board and Board committeemeetingsAttendance during the year for all Board and Board committeemeetings is given in the table below.ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS [A]Corporate and NominationSocial andAudit Responsibility Succession RemunerationBoard Committee Committee Committee CommitteeJosef Ackermann 7/8 4/4 4/5Malcolm Brinded 2/2Guy Elliott 8/8 5/5Simon Henry 8/8CharlesO. Holliday 8/8 4/4 5/5Lord Kerr ofKinlochard 2/2 2/2 2/2GerardKleisterlee 8/8 5/5Christine Morin-Postel 8/8 5/5Jorma Ollila 8/8 6/6Sir NigelSheinwald 4/4 2/2Linda G. Stuntz 8/8 5/5Jeroen van derVeer 8/8 4/4Peter Voser 8/8Hans Wijers 8/8 6/6 5/5[A] The first figure represents attendance and the second figure the possiblenumber of meetings. For example, 7/8 signifies attendance at seven out ofeight possible meetings. Where a Director stood down from the Board or aBoard committee during the year, or was appointed during the year, onlymeetings before standing down or after the date of appointment areshown.CORPORATE GOVERNANCE

80 Shell Annual Report and Form 20-F 2012 reports.shell.comCorporate governanceExecutive CommitteeThe Executive Committee operates under the direction of the ChiefExecutive Officer in support of his responsibility for the overallmanagement of the Company’s business and affairs. The ChiefExecutive Officer has final authority in all matters of management thatare not within the duties and authorities of the Board or of theshareholders’ general meeting.The membership of the Executive Committee is as follows:EXECUTIVE COMMITTEEPeter VoserChief Executive Officer [A][B]Simon HenryChief Financial Officer [A][B]Ben van Beurden Downstream Director [B][C]Matthias Bichsel Projects & Technology Director [B]Andrew Brown Upstream International Director [B][D]Hugh Mitchell Chief Human Resources & Corporate Officer [B]Marvin Odum Upstream Americas Director [B]Peter ReesLegal Director [B][A] Director of the Company.[B] Designated an Executive Officer pursuant to US Exchange Act Rule 3b-7.Beneficially owns less than 1% of outstanding classes of securities.[C] As announced on October 10, 2012, Ben van Beurden took over theresponsibilities for the Downstream business as a member of the ExecutiveCommittee in succession to Mark Williams with effect from January 1, 2013.[D] As announced on February 22, 2012, Andrew Brown took over theresponsibilities for the Upstream International business as a member of theExecutive Committee with effect from April 1, 2012. Malcolm Brindedstood down as Executive Director, Upstream International with effect fromthis date.Board committeesThere are four Board committees made up of Non-executive Directors.These are the:▪ Audit Committee;▪ Corporate and Social Responsibility Committee;▪ Nomination and Succession Committee; and▪ Remuneration Committee.Each of these Board committees has produced a report which is set outbelow and has been approved by the relevant chairman. A copy ofeach committee’s terms of reference is available from the CompanySecretary and can be found at www.shell.com/investor.AUDIT COMMITTEEThe members of the Audit Committee are Guy Elliott (Chairman of theCommittee), Gerard Kleisterlee, Christine Morin-Postel and Linda G.Stuntz, all of whom are financially literate, independent, NonexecutiveDirectors. For the purposes of the Code, Guy Elliott qualifiesas a person with “recent and relevant financial experience” and forthepurposesofUSsecuritieslawsisan“auditcommitteefinancialexpert”. The Committee met five times during the year; the Committeemembers’ attendances are shown on page 79.RoleThe key responsibilities of the Committee are to assist the Board infulfilling its oversight responsibilities in relation to: internal control andfinancial reporting; the effectiveness of the risk management andinternal control system; compliance with applicable external legal andregulatory requirements; monitoring the qualifications, expertise,resources and independence of both the internal and externalauditors; and assessing each year the auditors’ performance andeffectiveness. The Committee keeps the Board informed of theCommittee’s activities and recommendations. Where the Committee isnot satisfied with, or wherever it considers action or improvement isrequired concerning any aspect of risk management and internalcontrol, financial reporting or audit-related activities, it promptlyreports these concerns to the Board.ActivitiesThe Committee in its meetings covers a variety of topics, both standingitemsthattheCommitteeconsidersasamatterofcourse(typicallyinrelation to the quarterly results announcements, control and accountingmatters) as well as a range of specific topics relevant to the overallcontrol framework of the Company. The Committee invites the ChiefFinancial Officer, the Chief Internal Auditor, the Executive VicePresident Controller, the Vice President Accounting and Reporting andthe external auditors to attend each meeting. Other members ofmanagement attend as and when requested. The Committee also holdsprivate sessions with the external auditors and the Chief InternalAuditor without members of management being present.During 2012, the Committee received comprehensive reports frommanagement and the internal and external auditors. In particular, itreviewed regular reports on risks, controls and assurance, monitoredthe effectiveness of the procedures for internal control over financialreporting, reviewed the Company’s evaluation of the internal controlsystems as required under Section 404 of the Sarbanes-Oxley Act anddiscussed the Company’s annual accounts, half-year report andquarterly unaudited financial statements with management and theexternal auditors. It also discussed with the Chief Financial Officer, theExecutive Vice President Controller, the Vice President Accounting andReporting, and the external auditors issues that arose on accountingpolicies, practices and reporting, and received reports regarding thereceipt, investigation and treatment of complaints regardingaccounting, internal accounting controls, auditing and other matters.The Committee also reviewed the Internal Audit Department’s annualaudit plan and the performance assessment of the Internal Auditfunction. The Committee also visited Shell’s Real Time OperationCenter of the Wells Organization in Aberdeen, UK, and was updatedon various matters such as strategy, controls and risk managementincluding on process safety, resource planning and developments indrill technologies. The Committee has furthermore requested reports onsuch matters that it deemed appropriate.The Committee conducted an annual evaluation of its performance andconcluded that it was effective and able to fulfil its role in accordancewith its terms of reference. In December 2012, the Board approved anadjustment to the Committee’s terms of reference to reflect more clearlyits responsibility for monitoring the effectiveness of Shell’s system ofrisk management and internal control. The amended terms of referenceare available from the Company Secretary and can be found atwww.shell.com/investor.External auditorsDuring 2012, the Committee evaluated the effectiveness of theexternal auditors (PricewaterhouseCoopers LLP) and, following dueconsideration, made a recommendation to the Board that they bereappointed for the year ending December 31, 2012. There are nocontractual obligations that restrict the Committee’s ability to makesuch a recommendation.The last competitive audit tender was in 2005 whenPricewaterhouseCoopers LLP was first appointed as sole auditors of theCompany. Their performance has been evaluated each year by theCommittee. Such evaluations have taken account of the prior year’sexternal audit experience, feedback from management and compliancewith relevant legislative, regulatory and professional requirements.

eports.shell.com Shell Annual Report and Form 20-F 2012 81Corporate governanceNon-audit servicesThe Committee has adopted a policy on the engagement of theexternal auditor to supply non-audit services. This policy, designed tosafeguard auditor objectivity and independence, includes guidelineson permitted and non-permitted services and on services requiringspecific approval by the Committee.Examplesofnon-permittedservicesareactuarialservices,bookkeeping services, valuation services (unless the services areunrelated to financial reporting), management or recruitment services,legal services and expert services unrelated to the audit, tax adviceand broker or dealer, investment adviser or banking services.For other services, because of their knowledge, experience and/or forreasons of confidentiality it can be more efficient or necessary toengage the external auditors rather than another party. Under thepolicy, permitted services must not present a conflict of interest. TheCommittee reviews quarterly reports from management on the extentof the permitted non-audit services provided in accordance with thepolicy or for which specific approval is being sought. Non-auditservices in the following categories can be contracted without furtherindividual prior approval provided the fee value for each contractdoes not exceed $500,000:▪ tax compliance work that is part of the assurance process for theaudit of the Consolidated or Parent Company Financial Statements orthe accounts of subsidiaries;▪ regulatory compliance audits; and▪ verification of non-financial data for public disclosure.Any other non-audit services must be specifically preapproved beforethe external auditor is contracted.The scope of the permitted non-audit services contracted with theexternal auditors in 2012 consisted mainly of tax compliance workand the associated compensation amounted to approximately 2% oftotal Auditors’ remuneration.FeesNote 26 to the “Consolidated Financial Statements” provides thedetail of the Auditors’ remuneration.CORPORATE AND SOCIAL RESPONSIBILITY COMMITTEEThe members of the Corporate and Social Responsibility Committeeare Charles O. Holliday (Chairman of the Committee), Sir NigelSheinwald (with effect from July 1, 2012), Jeroen van der Veer andGerrit Zalm (with effect from January 1, 2013). Lord Kerr ofKinlochard stood down as a Director of the Company and member ofthe Committee with effect from the close of business of the 2012 AGM.The Committee met four times during the year; the Committeemembers’ attendances are shown on page 79.The Committee has a mandate to maintain a comprehensive overviewof the policies and performance of the subsidiaries of the Companywith respect to the Shell General Business Principles and the Code ofConduct as well as major issues of public concern. Conclusions andrecommendations made by the Committee are reported directly toexecutive management and the Board.The Committee fulfils its responsibilities by reviewing the managementof health, safety, security, environmental and social impacts ofprojects and operations. It also monitors emerging environmental andsocial issues. It additionally provides input into the Shell SustainabilityReport and reviews a draft of the report before publication.In addition to holding regular formal meetings, the Committee also visitsShell locations and meets with local staff and external stakeholders inorder to observe how Shell’s standards regarding health, safety, security,the environment and social performance are being implemented inpractice. During 2012, the Committee visited the Niger Delta, Nigeriaand a production platform in the UK North Sea.NOMINATION AND SUCCESSION COMMITTEEThe members of the Nomination and Succession Committee are JormaOllila (Chairman of the Committee), Josef Ackermann (with effect fromMay 23, 2012) and Hans Wijers. Lord Kerr of Kinlochard stood downas a Director of the Company and member of the Committee witheffect from the close of business of the 2012 AGM. The Committee metsix times during the year; the Committee members’ attendances areshownonpage79.The Committee keeps under review the leadership needs of theCompany and identifies and nominates suitable candidates for theBoard’s approval to fill vacancies as and when they arise. In addition,it makes recommendations on who should be appointed Chairman ofthe Audit Committee, the Corporate and Social ResponsibilityCommittee and the Remuneration Committee and, in consultation withthe relevant chairman, recommends who should sit on the Boardcommittees. It also makes recommendations on corporate governanceguidelines, monitors compliance with corporate governancerequirements and makes recommendations on disclosures connectedwith corporate governance and its appointment processes.During 2012, the Committee dealt with issues related to: directorsearch, succession and nomination; the terms of appointment for theNon-executive Directors; the appointment of the Upstream InternationalDirector and the Downstream Director; the Executive Committee talentpipeline; and the terms of reference of the Audit Committee and theCorporate and Social Responsibility Committee. It also considered theUK’s Department for Business, Innovation & Skills (BIS) Executive Pay-Shareholder Voting Rights Consultation and the 2012 UK CorporateGovernance Code. Additionally, the Committee conducted anevaluation of the Company’s corporate governance arrangements, ledthe Board evaluation process and considered any potential conflicts ofinterest and the independence of the Non-executive Directors.The Board takes the issue of Boardroom diversity very seriously andbelieves that maintaining an appropriate balance of experience, skills,knowledge and background is key to its effective performance. Itbelieves gender diversity is an important element of this mix. In 2011,it issued a statement welcoming the recommendations of the DaviesReport and stated that by 2015 at least 25% of the Directors would, asrecommended by the report, be expected to be women. At the end of2012 there were two women on the Board (16%).As part of its role in identifying and nominating suitable candidates forthe Board’s approval, the Nomination and Succession Committee willbe reviewing candidates from a variety of backgrounds and will seekto produce a list of candidates that fully reflects the Board’s aim inrelation to diversity, and in particular with reference to genderdiversity. The Board will endeavour to increase the number of womenNon-executive Directors from two to three by 2015.The Committee maintains regular contact with leading global searchfirms (including Egon Zehnder International) to identify and considersuitable candidates who reflect the Board’s preferred profile in terms ofexperience, skills, knowledge, nationality and gender, however it wasnot considered necessary to use such services nor advertising in relationCORPORATE GOVERNANCE

82 Shell Annual Report and Form 20-F 2012 reports.shell.comCorporate governanceto appointments made during the year. These firms have no otherconnection with the Company than that of search consultants.REMUNERATION COMMITTEEThe members of the Remuneration Committee are Hans Wijers(Chairman of the Committee), Josef Ackermann and CharlesO. Holliday. The Committee met five times during the year; theCommittee members’ attendances are shown on page 79.The Committee determines and agrees with the Board theremuneration policy for the Chairman, Chief Executive Officer andExecutive Directors and, within the terms of this policy, determinestheir individual remuneration. The Committee also considers andadvisesonthetermsofanycontracttobeofferedtoanExecutiveDirector. It monitors the remuneration for other senior executives andmakes recommendations. The Committee’s terms of reference werereviewed and confirmed in 2012. They are available from theCompany Secretary and can be found at www.shell.com/investor.In 2012, the Committee continued its constructive engagements withmajor shareholders and shareholder bodies. This dialogue will continuein 2013; after publication of the 2012 Annual Report and Form 20-F,further meetings with major shareholders are planned. The Committeewill continue to monitor developments in respect of executiveremuneration governance and reporting, and prepare for revisedregulations in this area for the 2013 Directors’ Remuneration Report.Further information on the work of the Committee and details of theremuneration of all the Directors for the year ended December 31,2012, are set out in the “Directors’ Remuneration Report” beginningon page 60.Board evaluationThe Board carried out a performance evaluation of itself, itsCommittees, the Chairman and each of the Directors. This was led bythe Nomination and Succession Committee and, like the process in2011, was conducted in-house. In accordance with the provisions ofthe Code, it is the intention to engage an external facilitator to assist inthe process for 2013.The 2012 process consisted of the Chairman holding one-to-oneinterviews with each of the Directors. The Directors were asked toconsider certain specific matters in advance, such as the functioningand effectiveness of the Board and the major issues and challenges for2013 and beyond. The Deputy Chairman and Senior IndependentDirector conducted a separate review of the Chairman’s performancewhich involved each Director completing a confidential questionnaireand an offer to meet and discuss any particular issues. A review ofeach Board committee was undertaken by the respective CommitteeChairman by questionnaire discussed in the relevant committee.The performance of the Board and the Board Committees wasdiscussed by the Nomination and Succession Committee and the fullBoard.TheChairmanreportedontheviewsoftheDirectorsinrelationto: functioning and effectiveness, performance, individualcontributions, major challenges for the Company in 2013 andbeyond, reputation and information and training. Successes andpoints for further improvement were noted in each of these categories.Suggestions for 2013 included further consideration of the balance ofdiscussion held on strategy, operational and performance matters,and an increased focus on people issues. It was concluded that whilethe Company faced a number of challenges and disappointments in2012, the Board and Board committees continued to operateeffectively.The performance evaluation of the Chairman was reviewed in asession led by the Deputy Chairman with attendance by all otherDirectors excluding the Chairman. Directors had answered fivequestions concerning the performance evaluation of the Chairman (inrelation to handling of the Board, representational role, internal role,suggestions for 2013 and key 2013 issues). The Board’s evaluation ofthe Chairman’s 2012 performance was unanimously positive.Directors noted that the Chairman was very accessible to them, the2012 AGM had gone well, and that the external engagements by theChairman had made a good impression. Individual Directors made anumber of Board planning and meeting suggestions for consideration.Shareholder communicationsThe Board recognises the importance of two-way communication withthe Company’s shareholders. As well as giving a balanced report ofresults and progress at each AGM, the Company meets withinstitutional and retail shareholders to respond to their questions.Shell’s corporate website at www.shell.com/investor has informationfor institutional and retail shareholders alike. Shareholders have anopportunity to ask questions in person at the AGM and are free tocontact the Company directly at any time of the year. Shareholderscan contact Shell directly via dedicated shareholder email addressesor via dedicated shareholder telephone numbers as given on theinside back cover of this Report.The Company’s Registrar, Equiniti, operates an internet access facilityfor shareholders, providing details of their shareholdings atwww.shareview.co.uk. Facilities are also provided for shareholders tolodge proxy appointments electronically. The Company’s CorporateNominee provides a facility for investors to hold their shares in theCompany in paperless form.Results presentations and analysts’ meetingsThe quarterly, half-yearly and annual results presentations as well asall major analysts’ meetings are announced in advance on the Shellwebsite and through a regulatory release. These presentations arebroadcast live via webcast and teleconference. Other meetings withanalysts or investors are not normally announced in advance, nor canthey be followed remotely by webcast or any other means. Proceduresare in place to ensure that discussions in such meetings are alwayslimited to non-material information or information already in the publicdomain.Results and meeting presentations can be found at www.shell.com.This is in line with the requirement to ensure that all shareholders andother parties in the financial market have equal and simultaneousaccess to information that may influence the price of the Company’ssecurities. The Chairman, the Deputy Chairman and SeniorIndependent Director, the Chief Executive Officer, the Chief FinancialOfficer and the Executive Vice President Investor Relations meetregularly with major shareholders and report the views of suchshareholders to the Board.Notification of major shareholdingsInformation concerning notifications of major shareholdings is givenon page 90.Responsibility for preparing the annual reportand accountsInformation concerning the responsibility for preparing the annualreport and accounts is given on page 57.

eports.shell.com Shell Annual Report and Form 20-F 2012 83Corporate governanceGoing concernThe Business Review on pages 8-51 includes information about Shell’sfinancial strategy, financial condition, and liquidity and cash flows, aswell as the factors, including the principal risks, likely to affect Shell’sfuture development. Further information on the management of Shell’scapital structure and use of financial instruments to support itsoperating plan is given in Notes 15 and 21 to the “ConsolidatedFinancial Statements” respectively.Shell’s operating plan for the foreseeable future demonstrates itsability to operate its cash-generating activities, selling products to adiversified customer base. These activities are expected to generatesufficient cash to enable Shell to fund its investment activities,dividends and service its financing requirements. As a result, theDirectors have a reasonable expectation that the Company hasadequate resources to continue in operational existence for theforeseeable future and continue to adopt the going concern basis ofaccounting in preparing the financial statements contained in thisReport.Controls and proceduresThe Board is responsible for maintaining a sound system of riskmanagement and internal control, and for regularly reviewing itseffectiveness. It has delegated authority to the Audit Committee toassist it in fulfilling its responsibilities in relation to internal control andfinancial reporting.A single overall control framework is in place for the Company and itssubsidiaries that is designed to manage rather than eliminate the riskof failure to achieve business objectives. It therefore only provides areasonable and not an absolute assurance against materialmisstatement or loss.The following diagram illustrates the Control Framework’s keycomponents, Foundations, Organisation and Processes. “Foundations”comprise the objectives, principles and rules that underpin andestablish boundaries for Shell’s activities. “Organisation” sets out howthe various legal entities relate to each other and how their businessactivities are organised and managed. “Processes” refer to the morematerial processes, including how authority is delegated, howstrategy, planning and appraisal are used to improve performance,how compliance is managed and how assurance is provided. Allcontrol activities relate to one or more of these components.The system of risk management and internal control over financialreporting is an integral part of the Shell Control Framework. Regularreviews are performed to identify the significant risks to financialreporting and the key controls designed to address them. Thesecontrols are documented, responsibility is assigned and they aremonitored for design and operating effectiveness. Controls found notto be effective are remediated.CONTROL FRAMEWORKFoundationsExternal Regulatory and Legal Environment, External StakeholdersShell General Business PrinciplesRoyal Dutch Shell plc Board, Chief Executive Officer andExecutive CommitteeStatement onCode of ConductRisk ManagementStandards, Manualsand GuidesBusinesses, FunctionsOrganisationDelegation ofAuthorityCompliance and AssuranceProcessesStrategy, Planningand AppraisalLegal EntitiesThe Board confirms that there is an ongoing process for identifying,evaluating and managing the significant risks to the achievement ofShell’s objectives. This has been in place throughout the year and, upto the date of this Report, is regularly reviewed by the Board andaccords with the guidance for directors, known as the TurnbullGuidance.Shell has a variety of processes for obtaining assurance on theadequacy of risk management and internal control. The ExecutiveCommittee and the Audit Committee regularly consider group-levelrisks and associated control mechanisms. The Board has conducted itsannual review of the effectiveness of Shell’s system of risk managementand internal control, including financial, operational and compliancecontrols.PENSION FUNDSIn general, local trustees manage the defined benefit pension fundsand set the required contributions based on independent actuarialvaluations in accordance with local regulations rather than the IFRSmeasures. For further information regarding the judgement applied insetting the actuarial assumptions and its relationship to the financialposition of Shell, see Notes 3 and 18 to the “Consolidated FinancialStatements”.Shell has a number of ways to address key pension risks. Principalamong these is the Pensions Forum, a joint Finance/Human Resourcesbody, chaired by the Chief Financial Officer, which providesguidance on Shell’s input to pension strategy, policy and operation.The Forum is supported by the Pensions Risk Committee in reviewingthe results of assurance processes with respect to pension risks (see“Risk factors”).TREASURY AND TRADINGIn the normal course of business, Shell uses financial instruments ofvarious kinds for the purposes of managing exposure to interest rate,currency and commodity price movements.Shell has treasury standards applicable to all subsidiaries, and eachsubsidiary is required to adopt a treasury policy consistent with thesestandards. These policies cover financing structure, interest rate andforeign exchange risk management, insurance, counterparty riskmanagement and use of derivative instruments. Wherever possible,treasury operations are carried out through specialist regionalorganisations without removing from each subsidiary the responsibilityto formulate and implement appropriate treasury policies.CORPORATE GOVERNANCE

84 Shell Annual Report and Form 20-F 2012 reports.shell.comCorporate governanceMost of Shell’s debt is raised from central borrowing programmes. Thefinancing of most subsidiaries is structured on a floating-rate basisand, except in special cases, further interest rate risk management isdiscouraged.Each subsidiary has treasury policies in place that are designed tomeasure and manage their foreign exchange exposures by referenceto their functional currency. Many of the markets in which Shelloperates are priced, directly or indirectly, in dollars. As a result, thefunctional currency of most Upstream subsidiaries and those withsignificant cross-border business is the dollar. For Downstreamsubsidiaries, the local currency is typically also the functionalcurrency.Apart from forward foreign exchange contracts to meet knowncommitments, the use of derivative financial instruments by mostsubsidiaries is not permitted by their treasury policy.Certain subsidiaries have a mandate to trade crude oil, natural gas,LNG, refined products, chemical feedstocks, power and environmentalproducts, and to use commodity derivatives (forwards, futures, swapsand options) as a means of managing price and timing risks arisingfrom this trading. In effecting these transactions, the subsidiariesconcerned operate within procedures and policies designed to ensurethat risks, including those relating to the default of counterparties, aremanaged within authorised limits.Shell uses risk management systems for recording and valuinginstruments. There is regular review of mandated trading limits bysenior management, daily monitoring of market risk exposure usingvalue-at-risk (VAR) techniques (see below), daily monitoring of tradingpositions against limits and marking-to-market of trading exposureswith a department independent of traders reviewing the market valuesapplied to trading exposures. Although trading losses can and dooccur, the nature of Shell’s trading portfolio and its management areconsidered adequate mitigants against the risk of significant losses.Shell utilises VAR techniques based on variance/covariance or MonteCarlo simulation models to make a statistical assessment of the marketrisk arising from possible future changes in market values over a 24-hourperiod and within a 95% confidence level. The calculation of the rangeof potential changes in fair value takes into account positions, the historyof price movements and the correlation of these price movements. Eachof the models is regularly back-tested against actual fair-valuemovements to ensure that model integrity is maintained.Other than in exceptional cases, the use of external derivativeinstruments is confined to specialist trading and central treasuryorganisations that have appropriate skills, experience, supervision,control and reporting systems.Information on derivatives and other financial instruments andderivative commodity instruments is provided in Note 21 to the“Consolidated Financial Statements”.MANAGEMENT’S EVALUATION OF DISCLOSURE CONTROLS ANDPROCEDURES OF SHELLAs indicated in the certifications in Exhibits 12.1 and 12.2 of thisReport, Shell’s Chief Executive Officer and Chief Financial Officerhave evaluated the effectiveness of Shell’s disclosure controls andprocedures as at December 31, 2012. On the basis of that evaluation,these officers have concluded that Shell’s disclosure controls andprocedures are effective.MANAGEMENT’S REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING OF SHELLManagement, including the Chief Executive Officer and ChiefFinancial Officer, is responsible for establishing and maintainingadequate internal control over Shell’s financial reporting and theproduction of the Consolidated Financial Statements. It conducted anevaluation of the effectiveness of Shell’s internal control over financialreporting and the production of the Consolidated Financial Statementsbasedonthe“InternalControl–IntegratedFramework”issuedbytheCommittee of Sponsoring Organizations of the TreadwayCommission. On the basis of this evaluation, management concludedthat, as at December 31, 2012, the Company’s internal control overShell’s financial reporting and the production of the ConsolidatedFinancial Statements was effective.PricewaterhouseCoopers LLP, the independent registered publicaccounting firm that audited the financial statements, has issued anattestation report on the Company’s internal control over financialreporting, as stated in their report on page 97.THE TRUSTEE’S AND MANAGEMENT’S EVALUATION OFDISCLOSURE CONTROLS AND PROCEDURES FOR THE ROYALDUTCH SHELL DIVIDEND ACCESS TRUSTThe Trustee of the Royal Dutch Shell Dividend Access Trust (the Trustee)and Shell’s Chief Executive Officer and Chief Financial Officer haveevaluated the effectiveness of the disclosure controls and proceduresin respect of the Dividend Access Trust (the Trust) as at December 31,2012. On the basis of this evaluation, these officers have concludedthat the disclosure controls and procedures of the Trust are effective.THE TRUSTEE’S AND MANAGEMENT’S REPORT ON INTERNALCONTROL OVER FINANCIAL REPORTING OF THE ROYAL DUTCHSHELL DIVIDEND ACCESS TRUSTThe Trustee is responsible for establishing and maintaining adequateinternal control over the Trust’s financial reporting. The Trustee and theCompany’s management conducted an evaluation of the effectivenessof internal control over financial reporting based on the “InternalControl – Integrated Framework” issued by the Committee ofSponsoring Organizations of the Treadway Commission. On the basisof this evaluation, the Trustee and management concluded that, as atDecember 31, 2012, the Trust’s internal control over financialreporting was effective.PricewaterhouseCoopers CI LLP, the independent registered publicaccounting firm that audited the financial statements, has issued anattestation report on the Trustee’s and management’s internal controlover financial reporting, as stated in their report on page 168.CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTINGThere has not been any change in the internal control over financialreporting of Shell or the Trust that occurred during the period coveredby this Report that has materially affected, or is reasonably likely tomaterially affect, the internal control over financial reporting. Materialfinancial information of the Trust is included in the ConsolidatedFinancial Statements of Shell and is therefore subject to the samedisclosure controls and procedures as Shell. See below and the RoyalDutch Shell Dividend Access Trust Financial Statements for additionalinformation.

eports.shell.com Shell Annual Report and Form 20-F 2012 85Corporate governanceArticles of AssociationThe following summarises certain provisions of the Articles [A] and ofthe applicable laws of England. This summary is qualified in its entiretyby reference to the Articles and the Act.[A] Copies of the Articles have been previously filed with the SEC and areincorporated by reference as exhibits to this Report. They can be found atwww.shell.com.MANAGEMENT AND DIRECTORSThe Articles provide that the Company’s Board of Directors mustconsist of not less than three members nor more than 20 members atany time. The Company has a single tier Board of Directors headed bya Chairman, with management led by a Chief Executive Officer. See“Board structure and composition” on page 78.Under the Articles, at every AGM any Director who was in office at thetime of the two previous AGMs and who did not retire at either of themmust retire. Further, a Director who would not otherwise be required toretire must retire if he or she has been in office, other than as aDirector holding an executive position, for a continuous period of nineyears or more at the date of the meeting, and any such Director will beeligible to stand for reappointment. However, notwithstanding theprovisions of the Articles, the Company complies with the Code thatrequires all Directors to stand for annual reappointment byshareholders. At the AGM, shareholders can pass an ordinaryresolution to reappoint each of the Directors or to appoint anothereligible person in his or her place.Under the Articles:▪ a Director may not vote or be counted in the quorum in respect ofany matter in which he or she is materially interested including anymatter related to his or her own compensation;▪ the Directors may exercise the Company’s power to borrow moneyprovided that the borrowings of Shell shall not, without the consent ofan ordinary resolution of the Company’s shareholders, exceed twotimes the Company’s adjusted capital and reserves (these powersrelating to borrowing may only be varied by special resolution ofshareholders); and▪ Directors are not required to hold shares of the Company to qualifyas a director.RIGHTS ATTACHING TO SHARESDividend rights and rights to share in the Company’s profitUnder the applicable laws of England, dividends are payable onA and B shares only out of profits available for distribution, asdetermined in accordance with the Act and under IFRS.Subject to the Act, if the Directors consider that the Company’sfinancial position justifies the payment of a dividend, the Companycan pay an interim dividend. Shareholders can declare dividends bypassing an ordinary resolution although such dividends cannot exceedthe amount recommended by the Board.It is the intention that dividends will be announced and paid quarterly.Dividends are payable to persons registered as shareholders on therecord date relating to the relevant dividend. All dividends will bedivided and paid in proportions based on the amounts paid up on theCompany’s shares during any period for which that dividend is paid.Any dividend or other money payable in cash relating to a share canbe paid by sending a cheque, warrant or similar financial instrumentpayable to the shareholder entitled to the dividend by post addressedto the shareholder’s registered address. Alternatively, it can be madepayable to someone else named in a written instruction from theshareholder (or all joint shareholders) and sent by post to the addressspecified in that instruction. A dividend can also be paid by inter-banktransfer or by other electronic means (including payment throughCREST) directly to an account with a bank or other financial institution(or other organisation operating deposit accounts if allowed by theCompany) named in a written instruction from the person entitled toreceive the payment under the Articles. Such an account must be heldat an institution based in the UK unless the share on which the paymentis to be made is held by Euroclear Nederland and is subject to theSecurities Giro Act (“Wet giraal effectenverkeer”). Alternatively, adividend can be paid in some other way requested in writing by ashareholder (or all joint shareholders) and agreed to by the Company.The Company will not be responsible for a payment which is lost ordelayed.Where any dividends or other amounts payable on a share have notbeen claimed, the Directors can invest them or use them in any otherway for the Company’s benefit until they are claimed. The Companywill not be a trustee of the money and will not be liable to pay intereston it. If a dividend or other money has not been claimed for 12 yearsafter being announced or becoming due for payment, it will beforfeited and go back to the Company, unless the Directors decideotherwise.The Company expects that dividends on B shares will be paid underthe dividend access mechanism described below. The Articles providethat if any amount is paid by the issuer of the dividend access share byway of dividend on the dividend access share and paid by the Trusteeto any holder of B shares, the dividend that the Company wouldotherwise pay to such holder of B shares will be reduced by an amountequal to the amount paid to such holder of B shares by the Trustee.Dividend access mechanism for B sharesGeneral A and B shares are identical, except for the dividend accessmechanism, which will only apply to B shares. Dividends paid on Ashares have a Dutch source for tax purposes and are subject to Dutchwithholding tax.It is the expectation and the intention, although there can be nocertainty, that holders of B shares will receive dividends through thedividend access mechanism. Any dividends paid on the dividendaccess share will have a UK source for UK and Dutch tax purposes.There will be no Dutch withholding tax on such dividends and certainholders (not including US holders of B shares or B AmericanDepositary Shares (ADSs)) will be entitled to a UK tax credit in respectof their proportional shares of such dividends. For further detailsregarding the tax treatment of dividends paid on the A and B sharesand ADSs, refer to “Taxation” on pages 94-95.Description of dividend access mechanism A dividend access share hasbeen issued by The Shell Transport and Trading Company Limited(Shell Transport) to Computershare Trustees (Jersey) Limited (formerlyEES Trustees International Limited) as Trustee. EES TrusteesInternational Limited replaced Lloyds TSB Offshore Trust CompanyLimited as Trustee on January 26, 2012. Pursuant to a declaration oftrust, the Trustee will hold any dividends paid in respect of thedividend access share on trust for the holders of B shares and willarrange for prompt disbursement of such dividends to holders of Bshares. Interest and other income earned on unclaimed dividends willbe for the account of Shell Transport and any dividends which areunclaimed after 12 years will revert to Shell Transport. Holders of Bshares will not have any interest in the dividend access share and willnot have any rights against Shell Transport as issuer of the dividendCORPORATE GOVERNANCE

86 Shell Annual Report and Form 20-F 2012 reports.shell.comCorporate governanceaccess share. The only assets held on trust for the benefit of the holdersof B shares will be dividends paid to the Trustee in respect of thedividend access share.The declaration and payment of dividends on the dividend accessshare will require board action by Shell Transport and will be subjectto any applicable limitations in law or in the Shell Transport articles ofassociation in effect. In no event will the aggregate amount of thedividend paid by Shell Transport under the dividend accessmechanism for a particular period exceed the aggregate of thedividend announced by the Board of the Company on B shares inrespect of the same period.Operation of the dividend access mechanism If, in connection with theannouncement of a dividend by the Company on B shares, the boardof Shell Transport elects to declare and pay a dividend on the dividendaccess share to the Trustee, the holders of B shares will be beneficiallyentitled to receive their share of that dividend pursuant to thedeclaration of trust (and arrangements will be made to ensure that thedividend is paid in the same currency in which they would havereceived a dividend from the Company).If any amount is paid by Shell Transport by way of a dividend on thedividend access share and paid by the Trustee to any holder ofB shares, the dividend which the Company would otherwise pay onB shares will be reduced by an amount equal to the amount paid tosuch holders of B shares by the Trustee.The Company will have a full and unconditional obligation, in theevent that the Trustee does not pay an amount to holders of B shareson a cash dividend payment date (even if that amount has been paidto the Trustee), to pay immediately the dividend announced onB shares. The right of holders of B shares to receive distributions fromthe Trustee will be reduced by an amount equal to the amount of anypayment actually made by the Company on account of any dividendon B shares.If for any reason no dividend is paid on the dividend access share,holders of B shares will only receive dividends from the Companydirectly. Any payment by the Company will be subject to Dutchwithholding tax (unless an exemption is obtained under Dutch law orunder the provisions of an applicable tax treaty).The dividend access mechanism has been approved by the DutchRevenue Service pursuant to an agreement(“vaststellingsovereenkomst”) with the Company and N.V. KoninklijkeNederlandsche Petroleum Maatschappij (Royal Dutch PetroleumCompany) dated October 26, 2004, as supplemented and amendedby an agreement between the same parties dated April 25, 2005. Theagreement states, among other things, that dividend distributions onthe dividend access share by Shell Transport will not be subject toDutch dividend withholding tax provided that the dividend accessmechanism is structured and operated substantially as set out above.The Company may not extend the dividend access mechanism to anyfuture issuances of B shares without the approval of the Dutch RevenueService.Accordingly, the Company would not expect to issue additionalB shares unless that approval were obtained or the Company were todetermine that the continued operation of the dividend accessmechanism was unnecessary. Any further issue of B shares is subject toadvance consultation with the Dutch Revenue Service.Transport, for any reason and without financial recompense. Thismight, for instance, occur in response to changes in relevant taxlegislation.The daily operations of the Trust are administered on behalf of Shell bythe Trustee. Material financial information of the Trust is included in theConsolidated Financial Statements of Shell and is therefore subject tothe same disclosure controls and procedures as Shell.Disputes between a shareholder or American Depositary Shareholder and Royal Dutch Shell plc, any subsidiary, Director orprofessional service providerThe Articles generally require that, except as noted below, all disputes(i) between a shareholder in such capacity and the Company and/orits Directors, arising out of or in connection with the Articles orotherwise; (ii) so far as permitted by law, between the Company andany of its Directors in their capacities as such or as the Company’semployees, including all claims made by the Company or on its behalfagainst Directors; (iii) between a shareholder in such capacity and theCompany’s professional service providers (which could include theCompany’s auditors, legal counsel, bankers and ADS depositaries);and (iv) between the Company and its professional service providersarising in connection with any claim within the scope of (iii) above,shall be exclusively and finally resolved by arbitration in The Hague,the Netherlands, under the Rules of Arbitration of the InternationalChamber of Commerce (ICC), as amended from time to time. Thiswould include all disputes arising under UK, Dutch or US law(including securities laws), or under any other law, between partiescovered by the arbitration provision. Accordingly, the ability ofshareholders to obtain monetary or other relief, including in respect ofsecurities law claims, may be determined in accordance with theseprovisions, and the ability of shareholders to obtain monetary or otherrelief may therefore be limited and their cost of seeking and obtainingrecoveries in a dispute may be higher than otherwise would be thecase.The tribunal shall consist of three arbitrators to be appointed inaccordance with the ICC rules. The chairman of the tribunal must haveat least 20 years’ experience as a lawyer qualified to practise in acommon law jurisdiction which is within the Commonwealth (asconstituted on May 12, 2005) and each other arbitrator must have atleast 20 years’ experience as a qualified lawyer.Pursuant to the exclusive jurisdiction provision in the Articles, if a courtor other competent authority in any jurisdiction determines that thearbitration requirement described above is invalid or unenforceable inrelation to any particular dispute in that jurisdiction, then that disputemay only be brought in the courts of England and Wales, as is thecase with any derivative claim brought under the Act. The governinglaw of the Articles is the substantive law of England.Disputes relating to the Company’s failure or alleged failure to pay allor part of a dividend which has been announced and which has fallendue for payment will not be subject to the arbitration and exclusivejurisdiction provisions of the Articles. Any derivative claim broughtunder the Act will not be subject to the arbitration provisions of theArticles.Pursuant to the relevant Depositary agreement, each holder of ADSs isbound by the arbitration and exclusive jurisdiction provisions of theArticles as described in this section as if that holder were ashareholder.The dividend access mechanism may be suspended or terminated atany time by the Company’s Directors or the Directors of Shell

eports.shell.com Shell Annual Report and Form 20-F 2012 87Corporate governanceVoting rights and general meetings of shareholdersShareholders meetings Under the applicable laws of England, theCompany is required in each year to hold an AGM of shareholders inaddition to any other meeting of shareholders that may be held. EachAGM must be held in the period six months from the date following theCompany’s accounting reference date each year. Additionally,shareholders may submit resolutions in accordance with Section 338of the Act.Directors have the power to convene a general meeting ofshareholders at any time. In addition, Directors must convene ameeting upon the request of shareholders holding not less than 5% ofthe Company’s paid-up capital carrying voting rights at generalmeetings of shareholders pursuant to Section 303 of the Act. A requestfor a general meeting of shareholders must state the general nature ofthe business to be dealt with at the meeting, and must be authenticatedby the requesting shareholders. If Directors fail to call such a meetingwithin 21 days from receipt of the request, the shareholders thatrequested the general meeting, or any of them representing more thanhalf of the total voting rights of all shareholders that requested themeeting, may themselves convene a meeting which must be calledwithin three months. Any such meeting must be convened in the samemanner, as nearly as possible, as that in which meetings are requiredto be convened by the Directors.The Company is required to give at least 21 clear days’ notice of anyAGM or any other general meeting of the Company.The Articles require that in addition to any requirements under thelegislation, the notice for any general meeting must state where themeeting is to be held (the principal meeting place) and the location ofany satellite meeting place, which shall be identified as such in thenotice. At the same time that notice is given for any general meeting,an announcement of the date, time and place of that meeting will, ifpracticable, be published in a national newspaper in the Netherlands.The rules of the UKLA, Euronext Amsterdam and the NYSE require theCompany to inform holders of its securities of the holding of meetingswhich they are entitled to attend.A shareholder is entitled to appoint a proxy (who is not required to beanother shareholder) to represent and vote on behalf of theshareholder at any general meeting of shareholders, including theAGM.Business may not be transacted at any general meeting, including theAGM, unless a quorum is present. A quorum is two people who areentitled to vote at that general meeting. They can be shareholders whoare personally present or proxies for shareholders entitled to vote atthat general meeting or a combination of both.If a quorum is not present within five minutes of the time fixed for ageneral meeting to start or within any longer period not exceeding onehour which the chairman of the meeting can decide, and if the meetingwas called by shareholders, it will be cancelled. Any other meetingwill be adjourned to a day (being not less than 10 days later,excluding the day on which it is adjourned and the day for which it isreconvened), time and place decided upon by the chairman of themeeting. One shareholder present in person or by proxy and entitledto vote will constitute a quorum at any adjourned general meeting.Record dates Entitlement to attend and vote at the AGM is determinedby reference to the Company’s Register of Members. In order to attendand vote at the AGM, a member must be entered on the Register ofMembers or the register of the Royal Dutch Shell Corporate Nomineeno later than the record date. The record date will not be more than 48hours before the meeting, not taking account of any part of a day thatis not a working day.Voting rights A and B shares have identical voting rights and votetogether as a single class on all matters including the election ofdirectors unless a matter affects the rights of one class as a separateclass. If a resolution affects the rights attached to either class of sharesas a separate class, it must be approved either in writing byshareholders holding at least three-quarters of the issued shares of thatclass by amount, excluding any shares of that class held as treasuryshares, or by special resolution passed at a separate meeting of theregisteredholdersoftherelevantclassofshares.It is the intention that all voting at general meetings will take place on apoll. A poll is voting by means of a ballot where the number of sharesheld by each voting shareholder is counted, as opposed to voting byway of a show of hands where the actual number of shares held byvoting shareholders is not taken into account. Under the Act, if a poll isdemanded, the resolution conducted on a poll must be approved byholders of at least a majority of the votes cast at the meeting. Specialresolutions require the affirmative vote of at least three-quarters of thevotes cast at the meeting to be approved.On a poll, every holder of A shares or B shares present in person or byproxy has one vote for every share he or she holds. This is subject toanyrightsorrestrictionswhicharegiventoanyclassofsharesinaccordance with the Articles. No shareholder is entitled to vote if he orshe has been served with a restriction order after failure to provide theCompany with information concerning interests in his or her sharesrequired to be provided under Section 793 of the Act.Major shareholders have no differing voting rights.Rights in a winding up If the Company is voluntarily wound up, theliquidator can distribute to shareholders any assets remaining after theliquidator’s fees and expenses have been paid and all sums due toprior ranking creditors (as defined under the laws of England) havebeen paid. Under the Articles, the holders of the sterling deferredshares would be entitled (such entitlement ranking in priority to therights of holders of ordinary shares) to receive an amount equal to theaggregate of the capital paid up or credited as paid up on eachsterling deferred share but would not be entitled to participate furtherin the profits or assets of the Company. Any assets remaining after theentitlements of the holders of sterling deferred shares are satisfiedwould be distributed to the holders of A and B shares pro rataaccording to their shareholdings.Redemption provisions Ordinary shares are not subject to anyredemption provisions.Sinking fund provisions Ordinary shares are not subject to any sinkingfund provision under the Articles or as a matter of the laws of England.Liability to further calls No holder of the Company’s ordinary shares iscurrently liable to make additional contributions of capital in respect ofthe Company’s ordinary shares.Discriminating provisions There are no provisions discriminatingagainst a shareholder because of his or her ownership of a particularnumber of shares.Variation of rights The Act provides that the Articles can be amendedby a special resolution of the Company’s shareholders.CORPORATE GOVERNANCE

88 Shell Annual Report and Form 20-F 2012 reports.shell.comCorporate governanceThe Articles provide that, if permitted by legislation, the rights attachedto any class of shares can be changed if this is approved either inwriting by shareholders holding at least three-quarters of the issuedshares of that class by amount (excluding any shares of that class heldas treasury shares) or by a special resolution passed at a separatemeetingoftheholdersoftherelevantclassofshares.Ateachsuchseparatemeeting,alloftheprovisionsoftheArticlesrelatingtoproceedings at a general meeting apply, except that: (i) a quorum willbe present if at least one shareholder who is entitled to vote is presentin person or by proxy who owns at least one-third in amount of theissued shares of the class; (ii) any shareholder who is present in personor by proxy and entitled to vote can demand a poll; and (iii) at anadjourned meeting, one person entitled to vote and who holds sharesof the class, or his or her proxy, will be a quorum. These provisionsare not more restrictive than required by law in England.Limitations on rights to own shares There are no limitations imposed bythe Articles or the applicable laws of England on the rights to ownshares, including the right of non-residents or foreign persons to holdor vote the Company’s shares, other than limitations that wouldgenerally apply to all shareholders.Change of controlThere are no provisions in the Articles or of corporate legislation inEngland that would delay, defer or prevent a change of control.Threshold for disclosure of share ownershipThe Disclosure and Transparency Rules of the UK’s Financial ServicesAuthority impose an obligation on persons [A] to notify the Companyof the percentage of voting rights held as a shareholder, or through thedirect or indirect holding of financial instruments, if the percentage ofvoting rights held in the Company reaches, exceeds or falls below 3%or any 1% threshold above 3%.[A] For this purpose “persons” includes companies, natural persons, legalpersons and partnerships.Section 793 of the Act governs the Company’s right to investigate whohas an interest in its shares. Under that section, a public company canserve a notice on any person it knows or has reasonable cause tobelieve is, or was at any time in the preceding three years, interestedin its shares in order to obtain certain information about that interest.The Articles provide that in any statutory notice under the relevantlegislation, the Company will ask for details of those who have aninterest and the extent of their interest in a particular holding. TheArticles also provide that when a person receives a statutory notice, hehas14daystocomplywithit.Ifhedoesnotdosoorifhemakesastatement in response to the notice which is false or inadequate insome important way, the Company may, on notice, restrict the rightsrelating to the identified shares. The restriction notice will state that theidentified shares no longer give the shareholder any right to attend orvote either personally or by proxy at a shareholders’ meeting or toexercise any right in relation to shareholders’ meetings. Where theidentified shares make up 0.25% or more (in amount or in number) oftheexistingsharesofaclassatthedateofdeliveryoftherestrictionnotice, the restriction notice can also contain the following furtherrestrictions: (i) Directors can withhold any dividend or part of adividend or other money otherwise payable in respect of the identifiedshares without any liability to pay interest when such money is finallypaid to the shareholder; and (ii) Directors can refuse to register atransfer of any of the identified shares which are certificated sharesunless Directors are satisfied that they have been sold outright to anindependent third party. Once a restriction notice has been given,Directors are free to cancel it or exclude any shares from it at any timethey think fit. In addition, they must cancel the restriction notice withinseven days of being satisfied that all information requested in thestatutory notice has been given. Also, where any of the identifiedshares are sold and Directors are satisfied that they were sold outrightto an independent third party, they must cancel the restriction noticewithin seven days of receipt of notification of the sale. The Articles donot restrict in any way the provision of the legislation which applies tofailures to comply with notices under the legislation.The UK City Code on Takeovers and Mergers (the Takeover Code)imposes disclosure obligations on parties subject to the TakeoverCode’s disclosure regime. This code requires any person who isinterested in 1% or more of any class of relevant securities of anofferee company to make an opening position disclosure following thecommencement of an offer period. The Takeover Code also requiresany person who is, or becomes, interested in 1% or more of any classof relevant securities of an offeree company to make a dealingdisclosure if the person deals in any relevant securities of the offereecompany during an offer period. If two or more persons act togetherpursuant to an agreement or understanding, whether formal orinformal, to acquire or control an interest in relevant securities of anofferee company, they will normally be deemed to be a single personfor the purpose of the relevant provisions of the Takeover Code.Rule 13d-1 of the US Securities Exchange Act of 1934 requires that aperson or group acquiring beneficial ownership of more than 5% ofequity securities registered under the US Securities Exchange Actdiscloses such information to the SEC within 10 days after the acquisition.Capital changesThe conditions imposed by the Articles for changes in capital are notmore stringent than those required by the applicable laws of England.Further informationThe following information can be found at www.shell.com/investor:▪ thetermsofreferenceoftheAuditCommittee,CorporateandSocialResponsibility Committee, Nomination and Succession Committeeand Remuneration Committee (these documents explain theCommittees’ roles and the authority the Board delegates to them);▪ the full list of matters reserved to the Board for decision;▪ Shell General Business Principles;▪ Shell Code of Conduct;▪ Code of Ethics for Executive Directors and Senior Financial Officers;and▪ Articles of Association.Signed on behalf of the Board/s/ Michiel BrandjesMichiel BrandjesCompany SecretaryMarch 13, 2013

eports.shell.com Shell Annual Report and Form 20-F 2012 89Additional shareholder informationADDITIONAL SHAREHOLDERINFORMATIONThe Company was incorporated in England and Wales on February 5,2002, as a private company under the Companies Act of England andWales 1985, as amended. On October 27, 2004, the Company wasre-registered as a public company limited by shares and changed itsname from Forthdeal Limited to Royal Dutch Shell plc. The Company isregistered at Companies House, Cardiff, under company number4366849, and at the Chamber of Commerce, The Hague, undercompany number 34179503. The business address for the Directorsand Senior Management is: Carel van Bylandtlaan 30, 2596 HR, TheHague, The Netherlands.The Company is resident in the Netherlands for Dutch and UK taxpurposes and its primary objective is to carry on the business of aholding company. It is not directly or indirectly owned or controlled byanother corporation or by any government and does not know of anyarrangements that may result in a change of control of the Company.Nature of trading marketThe Company has two classes of ordinary shares: A and B shares. Theprincipal trading market for A shares is Euronext Amsterdam and theprincipal trading market for B shares is the London Stock Exchange.Ordinary shares are traded in registered form.A and B American Depositary Shares (ADSs) are listed on the NewYork Stock Exchange [A]. A depositary receipt is a certificate thatevidences ADSs. Depositary receipts are issued, cancelled andexchanged at the office of The Bank of New York Mellon, 101 BarclayStreet, New York, NY 10286, USA, as depositary (the Depositary)under a deposit agreement between the Company, the Depositary andthe holders of ADSs. Each ADS represents two €0.07 shares of RoyalDutch Shell plc deposited under the agreement. More informationrelating to ADSs is given on page 93.[A] At February 19, 2013, there were outstanding 414,589,396 A ADSs and183,614,697 B ADSs representing 22.0% and 14.0% of the respectiveshare capital class, held by 7,199 and 969 holders of record with anaddress in the USA respectively. In addition to holders of ADSs, as atFebruary 19, 2013, there were 65,619 A shares and 763,521 B shares of€0.07 each representing 0.002% and 0.029% of the respective sharecapital class, held by 103 and 875 holders of record registered with anaddress in the USA respectively.LISTING INFORMATIONAsharesBsharesTicker symbol London RDSA RDSBTicker symbol Amsterdam RDSA RDSBTicker symbol New York (ADS [A]) RDS.A RDS.BISIN Code GB00B03MLX29 GB00B03MM408CUSIP G7690A100 G7690A118SEDOL Number London B03MLX2 B03MM40SEDOL Number Euronext B09CBL4 B09CBN6Weighting on FTSE as at 31/12/12 5.31% 3.85%Weighting on AEX as at 31/12/12 13.70% not included[A] Each A ADS represents two A shares of €0.07 each and each B ADSrepresents two B shares of €0.07 each.Share capitalThe issued and fully paid share capital of the Company as atFebruary 19, 2013, was as follows:SHARE CAPITALIssued and fully paidNumber Nominal valueOrdinary shares of €0.07 eachA shares 3,772,388,687 €264,067,208B shares 2,617,715,189 €183,240,063Sterling deferred shares of £1 each 50,000 £50,000The Directors may only allot new ordinary shares if they have authorityfrom shareholders to do so. The Company seeks to renew this authorityannually at its Annual General Meeting (AGM). Under the resolutionpassed at the Company’s 2012 AGM, the Directors were grantedauthority to allot ordinary shares up to an aggregate nominal amountequivalent to approximately one-third of the issued ordinary sharecapital of the Company (in line with the guidelines issued by institutionalinvestors).The following is a summary of the material terms of the Company’sordinary shares, including brief descriptions of the provisionscontained in the Articles of Association (the Articles) and applicablelaws of England and Wales in effect on the date of this document. Thissummary does not purport to include complete statements of theseprovisions:▪ upon issuance, A and B shares are fully paid and free from all liens,equities, charges, encumbrances and other interest of the Companyand not subject to calls of any kind;▪ all A and B shares rank equally for all dividends and distributions onordinary share capital announced; and▪ A and B shares are admitted to the Official List of the UK ListingAuthority and to trading on the market for listed securities of theLondon Stock Exchange. A and B shares are also admitted to tradingon Euronext Amsterdam. A and B ADSs are listed on the New YorkStock Exchange.ADDITIONAL SHAREHOLDER INFORMATION

90 Shell Annual Report and Form 20-F 2012 reports.shell.comAdditional shareholder informationAs at December 31, 2012, trusts and trust-like entities holding sharesfor the benefit of employee plans of Shell held (directly and indirectly)84.2 million shares of the Company with an aggregate market valueof $2,909 million and an aggregate nominal value of €5.9 million.Significant shareholdingsThe Company’s A and B shares have identical voting rights, andaccordingly the Company’s major shareholders do not have differentvoting rights.SIGNIFICANT INDIRECT AND DIRECT SHAREHOLDINGSAs at February 19, 2013, interests of major investors with 3% or moreofeitherclassoftheCompany’ssharesisgivenbelow.INDIRECTAshares Bshares TotalNumber % Number % Number %BlackRock, Inc. 190,215,159 5.04 169,732,143 6.48 359,947,302 5.63Legal & General Group plc 112,654,650 2.99 85,580,421 3.27 198,235,071 3.10The Capital Group Companies, Inc. 83,555,345 2.21 236,641,320 9.04 320,196,665 5.01As at February 19, 2013, direct holdings of 3% or more of either classof the Company’s shares held by registered members representing theinterests of underlying investors is given below.DIRECTAshares Bshares TotalNumber % Number % Number %BNY (Nominees) Limited 684,582,945 18.15 355,282,916 13.57 1,039,865,861 16.27Chase Nominees Limited 22,241,791 0.59 200,578,854 7.66 222,820,645 3.49Chase Nominees Limited (LEND) 29,806,628 0.79 89,982,649 3.44 119,789,277 1.87Euroclear Nederland 1,807,403,075 47.91 14,071,113 0.54 1,821,474,188 28.50Lynchwood Nominees Limited (2006420) 32,478,265 0.86 102,681,807 3.92 135,160,072 2.12State Street Nominees Limited (OM04) 54,054,818 1.43 133,411,145 5.10 187,465,963 2.93NOTIFICATION OF MAJOR SHAREHOLDINGSDuring the year ended December 31, 2012, the Company wasnotified by the following investor of its interests in the Company’sshares pursuant to Disclosure and Transparency Rule 5.INVESTORAshares Bshares TotalNumber % Number % Number %The Capital Group Companies, Inc. [A] 103,649,913 2.79 248,240,789 9.44 351,890,702 5.54[A] The Capital Group Companies, Inc. (CGC) stated in its reason for notification to the Company that, due to a company reorganisation, Capital Research andManagement Company (CRMC) and Capital Group International, Inc. (CGII) would no longer report relevant holdings under management separately. Insteadthe relevant holdings under management by CRMC and CGII would be reported in aggregate by CGC. It stated that it was solely for this reason (and not as aresult of any additional acquisition or disposal) that CGC reported this aggregated holding.The Company received no notifications pursuant to Disclosure andTransparency Rule 5 in the period from December 31, 2012, toFebruary 19, 2013 (being a date not more than one month prior to thedate of the Company’s Notice of AGM 2013).

eports.shell.com Shell Annual Report and Form 20-F 2012 91Additional shareholder informationDividendsThe following tables show the dividends on each class of share andeach class of ADS for the years 2008-2012.AANDBSHARES $2012 2011 2010 2009 2008Q1 0.43 0.42 0.42 0.42 0.40Q2 0.43 0.42 0.42 0.42 0.40Q3 0.43 0.42 0.42 0.42 0.40Q4 0.43 0.42 0.42 0.42 0.40Totalannouncedinrespect of the year 1.72 1.68 1.68 1.68 1.60ASHARES€ [A]2012 2011 2010 2009 2008Q1 0.35 0.29 0.32 0.32 0.26Q2 0.34 0.29 0.32 0.30 0.26Q3 0.33 0.32 0.31 0.28 0.31Q4 0.33 0.32 0.30 0.30 0.30Totalannouncedinrespect of the year 1.35 1.22 1.25 1.21 1.13Amount paid duringthe year 1.34 1.20 1.25 1.21 1.07[A] Euro equivalent, rounded to the nearest euro cent.BSHARESPENCE [A]2012 2011 2010 2009 2008Q1 27.92 25.71 27.37 28.65 20.05Q2 27.08 25.77 26.89 25.59 20.21Q3 26.86 27.11 26.72 25.65 24.54Q4 28.79 26.74 25.82 26.36 27.97Totalannouncedinrespect of the year 110.65 105.33 106.80 106.25 92.77Amount paid duringthe year 108.60 104.41 107.34 107.86 82.91[A] Sterling equivalent.AANDBADSs $2012 2011 2010 2009 2008Q1 0.86 0.84 0.84 0.84 0.80Q2 0.86 0.84 0.84 0.84 0.80Q3 0.86 0.84 0.84 0.84 0.80Q4 0.86 0.84 0.84 0.84 0.80Totalannouncedinrespect of the year 3.44 3.36 3.36 3.36 3.20Amount paid duringthe year 3.42 3.36 3.36 3.32 3.12ADDITIONAL SHAREHOLDER INFORMATION

92 Shell Annual Report and Form 20-F 2012 reports.shell.comAdditional shareholder informationHigh, low and year-end share pricesThe following table shows the high, low and year-end prices of theCompany’s registered ordinary shares:▪ of €0.07 nominal value on the London Stock Exchange;▪ of €0.07 nominal value on Euronext Amsterdam; and▪ in the form of ADSs on the New York Stock Exchange (ADSs do nothave a nominal value).ANNUAL SHARE PRICESEuronext AmsterdamAsharesNew York Stock ExchangeAADSsHigh€Low€Year-end€High$Low$Year-end$2008 29.63 16.25 18.75 88.73 41.62 52.942009 21.46 15.27 21.10 63.75 38.29 60.112010 25.28 19.53 24.73 68.54 49.16 66.782011 28.40 20.12 28.15 77.96 57.97 73.092012 29.18 24.30 25.98 74.51 60.62 68.95London Stock ExchangeBsharesNew York Stock ExchangeBADSsHighpenceLowpenceYear-endpenceHigh$Low$Year-end$2008 2,245 1,223 1,726 87.54 41.41 51.432009 1,897 1,315 1,812 62.26 37.16 58.132010 2,149 1,550 2,115 68.32 47.12 66.672011 2,476 1,768 2,454 78.75 58.42 76.012012 2,499 2,020 2,175 77.52 63.05 70.89QUARTERLY SHARE PRICESEuronextAmsterdamAsharesLondonStock ExchangeBsharesNew YorkStock ExchangeAADSsNew YorkStock ExchangeBADSsHigh€Low€HighpenceLowpenceHigh$Low$High$Low$2011Q1 26.74 23.80 2,289 1,772 73.84 65.30 73.87 65.00Q2 26.37 23.49 2,352 2,000 77.96 66.90 78.75 67.36Q3 26.04 20.12 2,323 1,768 75.56 59.85 76.13 60.05Q4 28.40 21.97 2,476 1,900 73.50 57.97 76.51 58.422012Q1 29.18 26.07 2,499 2,187 74.51 68.36 77.52 69.46Q2 27.12 24.30 2,286 2,020 72.07 60.62 74.19 63.05Q3 28.99 26.53 2,384 2,170 73.96 66.51 76.13 69.04Q4 27.32 25.29 2,271 2,093 70.61 64.17 72.67 66.25MONTHLY SHARE PRICESEuronextAmsterdamAsharesLondonStock ExchangeBsharesNew YorkStock ExchangeAADSsNew YorkStock ExchangeBADSsHigh€Low€HighpenceLowpenceHigh$Low$High$Low$2012September 28.31 26.87 2,349 2,198 73.96 69.00 76.13 70.93October 27.21 25.90 2,248 2,155 70.58 67.13 72.50 69.12November 27.32 25.29 2,271 2,093 70.61 64.17 72.67 66.25December 26.49 25.51 2,241 2,140 69.93 66.63 72.00 68.832013January 27.06 25.85 2,375 2,165 73.00 68.35 74.95 70.48February 26.02 24.36 2,309 2,143 70.92 64.53 72.79 66.00

eports.shell.com Shell Annual Report and Form 20-F 2012 93Additional shareholder informationMethod of holding shares or an interest insharesThere are several ways in which Royal Dutch Shell plc registeredshares or an interest in these shares can be held, including:▪ directly as registered shares either in uncertificated form or incertificated form in a shareholder’s own name;▪ indirectly through Euroclear Nederland (in respect of which the DutchSecurities Giro Act (“Wet giraal effectenverkeer”) is applicable);▪ through the Royal Dutch Shell Corporate Nominee; and▪ as a direct or indirect holder of either an A or a B ADS with theDepositary.American Depositary SharesThe Depositary is the registered shareholder of the shares underlyingthe A or B American Depositary Shares (ADSs) and enjoys the rights ofa shareholder under the Articles. Holders of ADSs will not haveshareholder rights. The rights of the holder of an A or a B ADS arespecified in the respective Depositary agreements with the Depositaryandaresummarisedbelow.The Depositary will receive all cash dividends and other cashdistributions made on the deposited shares underlying the ADSs and,where possible and on a reasonable basis, will distribute suchdividends and distributions to holders of ADSs. Rights to purchaseadditional shares will also be made available to the Depositary whomay make such rights available to holders of ADSs. All otherdistributions made on the Company’s shares will be distributed by theDepositary in any means that the Depositary thinks is equitable andpractical. The Depositary may deduct its fees and expenses and theamount of any taxes owed from any payments to holders and it maysell a holder’s deposited shares to pay any taxes owed. TheDepositary is not responsible if it decides that it is unlawful orimpractical to make a distribution available to holders of ADSs.The Depositary will notify holders of ADSs of shareholders’ meetings ofthe Company and will arrange to deliver voting materials to suchholders of ADSs if requested by the Company. Upon request by aholder, the Depositary will endeavour to appoint such holder as proxyin respect of such holder’s deposited shares entitling such holder toattend and vote at shareholders’ meetings. Holders of ADSs may alsoinstruct the Depositary to vote their deposited securities and theDepositary will try, as far as practical and lawful, to vote depositedshares in accordance with such instructions. The Company cannotensure that holders will receive voting materials or otherwise learn ofan upcoming shareholders’ meeting in time to ensure that holders caninstruct the Depositary to vote their shares.Upon payment of appropriate fees, expenses and taxes,(i) shareholders may deposit their shares with the Depositary andreceive the corresponding class and amount of ADSs and (ii) holdersof ADSs may surrender their ADSs to the Depositary and have thecorresponding class and amount of shares credited to their account.Further, subject to certain limitations, holders may, at any time, cancelADSs and withdraw their underlying shares or have the correspondingclass and amount of shares credited to their account. The Depositarymay also deliver ADSs prior to deposit of the underlying securitiessubject to certain conditions, including, without limitation, that suchpre-released ADSs are fully collateralised and that the underlyingsecurities are assigned to and held for the account of the Depositary.FEES PAID BY HOLDERS OF ADSsThe Depositary collects its fees for delivery and surrender of ADSsdirectly from investors depositing shares or surrendering ADSs for thepurpose of withdrawal or from intermediaries acting for them. TheDepositary collects fees for making distributions to investors bydeducting those fees from the amounts distributed or by selling aportion of distributable property to pay the fees. The Depositary maygenerally refuse to provide fee-attracting services until its fees for thoseservices are paid. (See page 94.)REIMBURSEMENTS TO THE COMPANYThe Bank of New York Mellon, as Depositary, has agreed to reimbursethe Company for expenses it incurs that are related maintenanceexpenses of the ADS programme. The Depositary has agreed toreimburse the Company for its continuing annual stock exchangelisting fees. The Depositary has also agreed to pay certain legalexpenses and the standard out-of-pocket maintenance costs for theADSs, which consist of the expenses of postage and envelopes formailing annual and interim financial reports, printing and distributingdividend cheques, electronic filing of US Federal tax information,mailing required tax forms, stationery, postage, facsimile andtelephone calls. It has also agreed to reimburse the Company annuallyfor certain costs associated with the AGM, investor relationshipprogrammes and special investor relations promotional activities.There are limits on the amount of expenses for which the Depositarywill reimburse the Company, but the amount of reimbursementavailable to the Company is not necessarily tied to the amount of feesthe Depositary collects from investors. From January 1, 2012, toFebruary 19, 2013, the Company received $2,000,413 from theDepositary.Scrip Dividend ProgrammeIn September 2010, the Company introduced a Scrip DividendProgramme which enables shareholders to increase their shareholdingby choosing to receive new shares instead of cash dividends, ifapproved by the Board. Only new A shares are issued under theprogramme, including to shareholders who hold B shares. Full detailsof the programme can be found at www.shell.com/dividend.When the programme was introduced, the Dividend ReinvestmentPlans (DRIPs) provided by Equiniti and Royal Bank of Scotland N.V.were withdrawn; the dividend reinvestment feature of the planprovided by The Bank of New York Mellon was likewise withdrawn. Ifshareholders had been participating in one of these plans, they werenot necessarily enrolled automatically in the Scrip DividendProgramme; in most cases, they had to elect to join the programme.ADDITIONAL SHAREHOLDER INFORMATION

94 Shell Annual Report and Form 20-F 2012 reports.shell.comAdditional shareholder informationPERSONS DEPOSITING OR WITHDRAWING SHARES MUST PAY:FOR:$5.00 or less per 100 ADSs (or portion of 100 ADSs) Issuance of ADSs, including those resulting from a distribution of shares, rightsor other property;Cancellation of ADSs for the purpose of their withdrawal, including if thedeposit agreement terminates;Distribution of securities to holders of deposited securities by the Depositary toADS registered holders.Registration and transfer feesRegistration and transfer of shares on the share register to or from the name ofthe Depositary or its agent when they deposit or withdraw shares.Expenses of the DepositaryCable, telex and facsimile transmissions (when expressly provided in thedeposit agreement);Converting foreign currency to US dollars.Taxes and other governmental charges the Depositary or the custodian has to pay As necessary.on any ADS or share underlying an ADS, for example, share transfer taxes, stampduty or withholding taxesExchange controls and other limitationsaffecting security holdersOther than those individuals and entities that are subject to EUsanctions, for example regarding Iran and Syria, there is no legislativeor other legal provision currently in force in the UK, the Netherlands orarising under the Articles restricting remittances to non-resident holdersof the Company’s ordinary shares or affecting the import or export ofcapital for use by the Company.TaxationGENERALThe Company is incorporated in England and Wales and tax-residentin the Netherlands. As a tax resident of the Netherlands, it is generallyrequired by Dutch law to withhold tax at a rate of 15% on dividendsonitsordinarysharesandADSs,subjecttotheprovisionsofanyapplicable tax convention or domestic law. The following sets forth theoperation of the provisions on dividends on the Company’s variousordinary shares and ADSs to UK and US holders, as well as certainother tax rules pertinent to holders. Holders should consult their taxadviser for more details.DIVIDENDS PAID ON THE DIVIDEND ACCESS SHAREThere is no Dutch withholding tax on dividends on B shares or B ADSsprovided that such dividends are paid on the dividend access sharepursuant to the dividend access mechanism (see “Dividend accessmechanism for B shares” on pages 85-86). Dividends paid on thedividend access share are treated as UK-source for tax purposes andthere is no UK withholding tax on them. Also, under UK law, individualshareholders resident in the UK are entitled to a UK tax credit withdividends paid on the dividend access share. The amount of the UKtax credit is 10/90ths of the cash dividend; it is not repayable when itexceeds the individual’s UK tax liability. In 2012, all dividends withrespect to B shares and B ADSs were paid on the dividend accessshare pursuant to the dividend access mechanism.DUTCH WITHHOLDING TAXWhen Dutch withholding tax applies on dividends paid to a US holder(that is, dividends on A shares or A ADSs, or on B shares or B ADSsthat are not paid on the dividend access share pursuant to thedividend access mechanism), the US holder will be subject to Dutchwithholding tax at the rate of 15%. A US holder who is entitled to thebenefits of the 1992 Double Taxation Convention (the Convention)between the USA and the Netherlands as amended by the protocolsigned on March 8, 2004, will be entitled to a reduction in the Dutchwithholding tax, either by way of a full or a partial exemption atsource or by way of a partial refund or a credit as follows:▪ if the US holder is an exempt pension trust as described in article35 of the Convention, or an exempt organisation as described inarticle 36 thereof, the US holder will be exempt from Dutchwithholding tax; or▪ if the US holder is a company that holds directly at least 10% of thevoting power in the Company, the US holder will be subject to Dutchwithholding tax at a rate not exceeding 5%.In general, the entire dividend (including any amount withheld) will bedividend income to the US holder, and the withholding tax will betreated as a foreign income tax that is eligible for credit against the USholder’s income tax liability or a deduction subject to certainlimitations. A “US holder” includes, but is not limited to, a citizen orresident of the USA, or a corporation or other entity organised underthe laws of the USA or any of its political subdivisions.When Dutch withholding tax applies on dividends paid to UK-residentholders (that is, dividends on A shares or A ADSs, or on B shares orB ADSs that are not paid on the dividend access share pursuant to thedividend access mechanism), the dividend will typically be subject towithholding tax at a rate of 15%. Such UK holder will be entitled to acredit (not repayable) for withholding tax against their UK tax liability.However, from July 1, 2009, certain corporate shareholders are,subject to conditions, exempt from UK tax on dividends. Withholdingtax suffered cannot be offset against such exempt dividends. Pensionfunds meeting certain defined criteria can, however, claim a fullrefund of the dividend tax withheld. Also, resident corporateshareholders holding at least a 5% shareholding and meeting otherdefined criteria are exempted at source from dividend tax.For shareholders who are resident in any other country, the availabilityof a whole or partial exemption or refund of Dutch withholding tax isgoverned by Dutch tax law and/or the tax convention, if any, betweenthe Netherlands and the country of the shareholder’s residence.SCRIP DIVIDEND PROGRAMMEAs mentioned on pages 56 and 93, in September 2010 the Companyintroduced a Scrip Dividend Programme which enables shareholdersto increase their shareholding by choosing to receive new sharesinstead of cash dividends, if approved by the Board. Only newA shares are issued under the programme, including to shareholderswho hold B shares.

eports.shell.com Shell Annual Report and Form 20-F 2012 95Additional shareholder informationThe tax consequences of electing to receive new A shares in place of acash dividend will depend on individual circumstances.FINANCIAL CALENDARFinancial year ends December 31, 2012Further details regarding the taxation consequences of the ScripDividend Programme can be found at www.shell.com/dividend.DUTCH CAPITAL GAINS TAXATIONCapital gains on the sale of shares of a Dutch tax-resident company bya US holder are generally not subject to taxation by the Netherlandsunless the US shareholder has a permanent establishment therein andthe capital gain is derived from the sale of shares that are part of thebusiness property of the permanent establishment.DUTCH SUCCESSION DUTY AND GIFT TAXESShares of a Dutch tax-resident company held by an individual who isnot a resident or a deemed resident of the Netherlands will generallynot be subject to succession duty in the Netherlands on the individual’sdeath unless the shares are part of the business property of apermanent establishment situated in the Netherlands.AnnouncementsFull year results for 2012 January 31, 2013First quarter results for 2013 May 2, 2013Second quarter results for 2013 August 1, 2013Third quarter results for 2013 October 31, 2013Dividend timetable [A]2012 Fourth quarter interim [B]Announced January 31, 2013Ex-dividend date February 13, 2013Record date February 15, 2013Scrip reference share price announcement date February 20, 2013Closing date for scrip election and currencyelection [C] March 1, 2013Euro and sterling equivalents announcement date March 8, 2013Payment date March 28, 2013AgiftofsharesofaDutchtax-residentcompanybyanindividual,whois not a resident or deemed a resident of the Netherlands, is generallynot subject to Dutch gift tax.UK STAMP DUTY AND STAMP DUTY RESERVE TAXSales or transfers of the Company’s ordinary shares within a clearanceservice (such as Euroclear Nederland) or of the Company’s ADSswithin the ADS depositary receipts system will not give rise to a stampduty reserve tax (SDRT) liability and should not in practice require thepayment of UK stamp duty.ThetransferoftheCompany’sordinarysharestoaclearanceservice(such as Euroclear Nederland) or to an issuer of depositary shares(such as ADSs) will generally give rise to a UK stamp duty or SDRTliability at the rate of 1.5% of consideration given or, if none, of thevalue of the shares. A sale of the Company’s ordinary shares that arenot held within a clearance service (for example, settled through theUK’s CREST system of paperless transfers) will generally be subject toUK stamp duty or SDRT at the rate of 0.5% of the amount of theconsideration, normally paid by the purchaser.CAPITAL GAINS TAXFor the purposes of UK capital gains tax, the market values [A] of theshares of the former public parent companies of the Royal Dutch/ShellGroup at the relevant dates were:£March 31, 1982 July 20, 2005Royal Dutch Petroleum Company(N.V. Koninklijke NederlandschePetroleum Maatschappij) which ceased toexist on December 21, 2005 1.1349 17.6625The “Shell” Transport and TradingCompany, p.l.c.which delisted on July 19, 2005 1.4502 Not applicable[A] Restated where applicable to reflect all capitalisation issues since therelevant date. This includes the change in the capital structure in 2005,when Royal Dutch Shell plc became the single parent company of RoyalDutch Petroleum Company and of The “Shell” Transport and TradingCompany, p.l.c., now The Shell Transport and Trading Company Limited,and one share in Royal Dutch Petroleum Company was exchanged for twoRoyal Dutch Shell plc A shares and one share in The “Shell” Transport andTrading Company, p.l.c. was exchanged for 0.287333066 Royal DutchShell plc B shares.2013 First quarter interimAnnounced May 2, 2013Ex-dividend date May 15, 2013Record date May 17, 2013Scrip reference share price announcement date May 22, 2013Closing date for scrip election and currencyelection [C] June 3, 2013Euro and sterling equivalents announcement date June 10, 2013Payment date June 27, 20132013 Second quarter interimAnnounced August 1, 2013Ex-dividend date August 14, 2013Record date August 16, 2013Scrip reference share price announcement date August 21, 2013Closing date for scrip election and currencyelection [C] September 2, 2013Euro and sterling equivalents announcement date September 9, 2013Payment date September 26, 20132013 Third quarter interimAnnounced October 31, 2013Ex-dividend date November 13, 2013Record date November 15, 2013Scrip reference share price announcement date November 20, 2013Closing date for scrip election and currencyelection [C] November 29, 2013Euro and sterling equivalents announcement date December 6, 2013Payment date December 23, 2013Annual General Meeting May 21, 2013[A] This timetable is the intended timetable as announced on November 1, 2012.[B] The Directors do not propose to recommend any further distribution in respectof 2012.[C] Different scrip and dividend currency election dates may apply toshareholders holding shares in a securities account with a bank or otherfinancial institution ultimately holding through Euroclear Nederland. Suchshareholders can obtain the applicable deadlines from their broker, financialintermediary, bank or other financial institution where they hold theirsecurities account. A different scrip election date may also apply toregistered and non-registered ADS holders. Registered ADS holders cancontact The Bank of New York Mellon for the applicable deadline.Non-registered ADS holders can contact their broker, financial intermediary,bank or other financial institution for the applicable election deadline.ADDITIONAL SHAREHOLDER INFORMATION

96 Shell Annual Report and Form 20-F 2012 reports.shell.comReport on the Annual Report and AccountsREPORT ON THE ANNUALREPORT AND ACCOUNTSIndependent auditors’ report to the members ofRoyalDutchShellplcWe have audited the Consolidated Financial Statements of RoyalDutch Shell plc (the Company) and its subsidiaries (collectively Shell)for the year ended December 31, 2012, which comprise theConsolidated Statement of Income, the Consolidated Statement ofComprehensive Income, the Consolidated Balance Sheet, theConsolidated Statement of Changes in Equity, the ConsolidatedStatement of Cash Flows and the related Notes. The financial reportingframework that has been applied in their preparation is applicablelaw and International Financial Reporting Standards (IFRSs) asadopted by the European Union.RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORSAs explained more fully in the statement of the Directors’responsibilities in respect of the preparation of the financial statementsset out on page 57, the Directors are responsible for the preparationof the Consolidated Financial Statements and for being satisfied thatthey give a true and fair view. Our responsibility is to audit andexpress an opinion on the Consolidated Financial Statements inaccordance with applicable law and International Standards onAuditing (UK and Ireland). Those standards require us to comply withthe Auditing Practices Board’s Ethical Standards for Auditors.This report, including the opinions, has been prepared for and only forthe Company’s members as a body in accordance with Chapter 3 ofPart 16 of the Companies Act 2006 and for no other purpose. We donot, in giving these opinions, accept or assume responsibility for anyother purpose or to any other person to whom this report is shown orinto whose hands it may come save where expressly agreed by ourprior consent in writing.SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTSAn audit involves obtaining evidence about the amounts anddisclosures in the Consolidated Financial Statements sufficient to givereasonable assurance that the Consolidated Financial Statements arefree from material misstatement, whether caused by fraud or error.This includes an assessment of: whether the accounting policies areappropriate to Shell’s circumstances and have been consistentlyapplied and adequately disclosed; the reasonableness of significantaccounting estimates made by the Directors; and the overallpresentation of the Consolidated Financial Statements. In addition, weread all the financial and non-financial information in the Royal DutchShell plc Annual Report and Form 20-F for 2012 to identify materialinconsistencies with the audited Consolidated Financial Statements. Ifwe become aware of any apparent material misstatements orinconsistencies we consider the implications for our report.OPINION ON FINANCIAL STATEMENTSIn our opinion the Consolidated Financial Statements:▪ give a true and fair view of the state of Shell’s affairs as atDecember 31, 2012, and of its income and cash flows for the yearthen ended;▪ have been properly prepared in accordance with IFRSs as adoptedby the European Union; and▪ have been prepared in accordance with the requirements of theCompanies Act 2006 and Article 4 of the lAS Regulation.SEPARATE OPINION IN RELATION TO IFRSs AS ISSUED BY THE IASBAs explained in Note 1 to the Consolidated Financial Statements, Shellin addition to complying with its legal obligation to apply IFRSs asadopted by the European Union, has also applied IFRSs as issued bythe International Accounting Standards Board (IASB).In our opinion the Consolidated Financial Statements comply withIFRSsasissuedbytheIASB.OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIESACT 2006In our opinion the information given in the Report of the Directors forthe financial year for which the Consolidated Financial Statements areprepared is consistent with the Consolidated Financial Statements.MATTERS ON WHICH WE ARE REQUIRED TO REPORT BYEXCEPTIONWe have nothing to report in respect of the following:Under the Companies Act 2006 we are required to report to you if, inour opinion:▪ certain disclosures of Directors’ remuneration specified by law arenot made; or▪ we have not received all the information and explanations werequire for our audit.Under the Listing Rules we are required to review:▪ the Directors’ statement, set out on page 83, in relation to goingconcern;▪ the part of the Corporate Governance Statement relating to theCompany’s compliance with the nine provisions of the UK CorporateGovernance Code specified for our review; and▪ certain elements of the report to shareholders by the Board onDirectors’ remuneration.OTHER MATTERWe have reported separately on the Parent Company FinancialStatements of Royal Dutch Shell plc for the year ended December 31,2012, and on the information in the Directors’ Remuneration Reportthat is described as having been audited.Stephen Johnson (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsLondonMarch 13, 2013Note:▪ The report set out above is included for the purposes of Royal DutchShell plc’s Annual Report and Accounts for 2012 only and does notform part of Royal Dutch Shell plc’s Annual Report on Form 20-F for2012.▪ The maintenance and integrity of the Royal Dutch Shell plc website(www.shell.com) are the responsibility of the Directors; the workcarried out by the auditors does not involve consideration of thesematters and, accordingly, the auditors accept no responsibility forany changes that may have occurred to the Consolidated FinancialStatements since they were initially presented on the website.▪ Legislation in the United Kingdom governing the preparation anddissemination of financial statements may differ from legislation inother jurisdictions.

eports.shell.com Shell Annual Report and Form 20-F 2012 97Report on the Annual Report on Form 20-FREPORT ON THE ANNUALREPORT ON FORM 20-FReport of independent registered publicaccounting firmTO THE BOARD OF DIRECTORS AND ROYAL DUTCH SHELL PLCSHAREHOLDERSIn our opinion, the accompanying Consolidated Statement of Income,the Consolidated Statement of Comprehensive Income, theConsolidated Balance Sheets, the Consolidated Statement of Changesin Equity, the Consolidated Statement of Cash Flows and the relatedNotes to the Consolidated Financial Statements present fairly, in allmaterial respects, the financial position of Royal Dutch Shell plc (theCompany) and its subsidiaries at December 31, 2012, andDecember 31, 2011, and the results of their operations and cashflows for each of the three years in the period ended December 31,2012, in conformity with International Financial Reporting Standardsas issued by the International Accounting Standards Board and inconformity with International Financial Reporting Standards asadopted by the European Union. Also in our opinion, the Companymaintained, in all material respects, effective internal control overfinancial reporting as of December 31, 2012, based on criteriaestablished in Internal Control – Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission(COSO). The Company’s management is responsible for theseConsolidated Financial Statements, for maintaining effective internalcontrol over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included inManagement’s Report on Internal Control over Financial Reporting ofShell set out on page 84. Our responsibility is to express opinions onthese Consolidated Financial Statements and on the Company’sinternal control over financial reporting based on our integratedaudits. We conducted our audits in accordance with the standards ofthe Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the Consolidated FinancialStatements are free of material misstatement and whether effectiveinternal control over financial reporting was maintained in all materialrespects. Our audits of the Consolidated Financial Statements includedexamining, on a test basis, evidence supporting the amounts anddisclosures in the Consolidated Financial Statements, assessing theaccounting principles used and significant estimates made bymanagement, and evaluating the overall financial statementpresentation. Our audit of internal control over financial reportingincluded obtaining an understanding of internal control over financialreporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. Our audits also includedperforming such other procedures as we considered necessary in thecircumstances. We believe that our audits provide a reasonable basisfor our opinions.A company’s internal control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accountingprinciples. A company’s internal control over financial reportingincludes those policies and procedures that (i) pertain to themaintenance of records that, in reasonable detail, accurately andfairly reflect the transactions and dispositions of the assets of thecompany; (ii) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and thatreceipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of thecompany; and (iii) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition, use, ordisposition of the company’s assets that could have a material effecton the financial statements.Because of its inherent limitations, internal control over financialreporting may not prevent or detect misstatements. Also, projections ofany evaluation of effectiveness to future periods are subject to the riskthat controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies orprocedures may deteriorate.PricewaterhouseCoopers LLPLondonMarch 13, 2013Note that the report set out above is included for the purposes ofRoyal Dutch Shell plc’s Annual Report on Form 20-F for 2012 only anddoes not form part of Royal Dutch Shell plc’s Annual Report andAccounts for 2012.FINANCIAL STATEMENTS AND SUPPLEMENTS

98 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial StatementsINDEX TO THE CONSOLIDATEDFINANCIAL STATEMENTS99 Consolidated Statement of Income99 Consolidated Statement of Comprehensive Income100 Consolidated Balance Sheet101 Consolidated Statement of Changes in Equity102 Consolidated Statement of Cash Flows103 Notes to the Consolidated Financial Statements103 Note 1 Basis of preparation103 Note 2 Accounting policies108 Note 3 Key accounting estimates and judgements110 Note 4 Segment information112 Note 5 Employees, Directors and Senior Management113 Note 6 Interest and other income113 Note 7 Interest expense114 Note 8 Intangible assets114 Note 9 Property, plant and equipment116 Note 10 Joint ventures and associates118 Note 11 Investments in securities118 Note 12 Trade and other receivables119 Note 13 Inventories119 Note 14 Cash and cash equivalents119 Note 15 Debt and lease arrangements122 Note 16 Trade and other payables122 Note 17 Taxation124 Note 18 Retirement benefits127 Note 19 Decommissioning and other provisions128 Note 20 Share capital128 Note 21 Financial instruments and other derivative contracts132 Note 22 Share-based compensation plans and shares held in trust134 Note 23 Other reserves135 Note 24 Dividends136 Note 25 Legal proceedings and other contingencies136 Note 26 Auditors’ remuneration136 Note 27 Earnings per share137 Note 28 Post-balance sheet events

eports.shell.com Shell Annual Report and Form 20-F 2012 99Consolidated Financial StatementsCONSOLIDATED STATEMENT OF INCOME$ MILLIONNOTES 2012 2011 2010Revenue 467,153 470,171 368,056Share of profit of equity-accounted investments 10 8,948 8,737 5,953Interest and other income 6 5,599 5,581 4,143Total revenue and other income 481,700 484,489 378,152Purchases 369,725 370,044 283,176Production and manufacturing expenses 26,280 26,458 24,458Selling, distribution and administrative expenses 14,616 14,335 15,528Research and development 1,314 1,125 1,019Exploration 3,104 2,266 2,036Depreciation, depletion and amortisation 14,615 13,228 15,595Interest expense 7 1,757 1,373 996Income before taxation 50,289 55,660 35,344Taxation 17 23,449 24,475 14,870Income for the period 4 26,840 31,185 20,474Income attributable to non-controlling interest 248 267 347Income attributable to Royal Dutch Shell plc shareholders 26,592 30,918 20,127All results are from continuing activities.EARNINGS PER SHARE $NOTES 2012 2011 2010Basic earnings per share 27 4.25 4.98 3.28Diluted earnings per share 27 4.24 4.97 3.28CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME$ MILLIONNOTES 2012 2011 2010Income for the period 26,840 31,185 20,474Other comprehensive income, net of tax: 23Currency translation differences 1,644 (3,328) (142)Unrealised (losses)/gains on securities (815) 1,684 (298)Cash flow hedging gains/(losses) 31 (222) (2)Share of other comprehensive (loss)/income of equity-accounted investments (222) 60 488Other comprehensive income/(loss) for the period 638 (1,806) 46Comprehensive income for the period 27,478 29,379 20,520Comprehensive income attributable to non-controlling interest 300 (348) 389Comprehensive income attributable to Royal Dutch Shell plc shareholders 27,178 29,727 20,131FINANCIAL STATEMENTS AND SUPPLEMENTSThe Notes on pages 103 to 137 form an integral part of these Consolidated Financial Statements.

100 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial StatementsCONSOLIDATED BALANCE SHEET$ MILLIONNOTES Dec 31, 2012 Dec 31, 2011AssetsNon-current assetsIntangible assets 8 4,470 4,521Property, plant and equipment 9 172,293 152,081Equity-accounted investments 10 38,350 37,990Investments in securities 11 4,867 5,492Deferred tax 17 4,045 4,732Retirement benefits 18 12,575 11,408Trade and other receivables 12 8,991 9,256245,591 225,480Current assetsInventories 13 30,781 28,976Trade and other receivables 12 65,403 79,509Cash and cash equivalents 14 18,550 11,292114,734 119,777Total assets 360,325 345,257LiabilitiesNon-current liabilitiesDebt 15 29,921 30,463Trade and other payables 16 4,175 4,921Deferred tax 17 15,590 14,649Retirement benefits 18 6,298 5,931Decommissioning and other provisions 19 17,435 15,63173,419 71,595Current liabilitiesDebt 15 7,833 6,712Trade and other payables 16 72,839 81,846Taxes payable 17 12,684 10,606Retirement benefits 18 402 387Decommissioning and other provisions 19 3,221 3,10896,979 102,659Total liabilities 170,398 174,254EquityShare capital 20 542 536Shares held in trust 22 (2,287) (2,990)Other reserves 23 10,021 8,984Retained earnings 180,218 162,987Equity attributable to Royal Dutch Shell plc shareholders 188,494 169,517Non-controlling interest 1,433 1,486Total equity 189,927 171,003Total liabilities and equity 360,325 345,257Signed on behalf of the Board/s/ Simon HenrySimon HenryChief Financial OfficerMarch 13, 2013The Notes on pages 103 to 137 form an integral part of these Consolidated Financial Statements.

eports.shell.com Shell Annual Report and Form 20-F 2012 101Consolidated Financial StatementsCONSOLIDATED STATEMENT OF CHANGES IN EQUITY$ MILLIONEquity attributable to Royal Dutch Shell plc shareholdersSharesSharecapital(see Note 20)held intrust(see Note 22)Otherreserves(see Note 23)RetainedearningsTotalNoncontrollinginterestTotalequityAt January 1, 2012 536 (2,990) 8,984 162,987 169,517 1,486 171,003Comprehensive income for the period – – 586 26,592 27,178 300 27,478Capital contributions from, and other changes in,non-controlling interest – – – 39 39 (61) (22)Dividends paid (see Note 24) – – – (10,955) (10,955) (292) (11,247)Scrip dividends (see Note 24) 9 – (9) 3,565 3,565 – 3,565Repurchases of shares (3) – 3 (1,728) (1,728) – (1,728)Shares held in trust: net sales and dividends received – 703 – 150 853 – 853Share-based compensation – – 457 (432) 25 – 25At December 31, 2012 542 (2,287) 10,021 180,218 188,494 1,433 189,927At January 1, 2011 529 (2,789) 10,094 140,179 148,013 1,767 149,780Comprehensive income for the period – – (1,191) 30,918 29,727 (348) 29,379Capital contributions from, and other changes in,non-controlling interest – – – 41 41 505 546Dividends paid (see Note 24) – – – (10,457) (10,457) (438) (10,895)Scrip dividends (see Note 24) 10 – (10) 3,580 3,580 – 3,580Repurchases of shares (3) – 3 (1,106) (1,106) – (1,106)Shares held in trust: net (purchases)/sales anddividends received – (201) – 142 (59) – (59)Share-based compensation – – 88 (310) (222) – (222)At December 31, 2011 536 (2,990) 8,984 162,987 169,517 1,486 171,003At January 1, 2010 527 (1,711) 9,982 127,633 136,431 1,704 138,135Comprehensive income for the period – – 4 20,127 20,131 389 20,520Capital contributions from, and other changes in,non-controlling interest – – – 283 283 69 352Dividends paid (see Note 24) – – – (10,196) (10,196) (395) (10,591)Scrip dividends (see Note 24) 2 – (2) 612 612 – 612Shares held in trust: net (purchases)/sales anddividends received – (1,078) – 1,521 443 – 443Share-based compensation – – 110 199 309 – 309At December 31, 2010 529 (2,789) 10,094 140,179 148,013 1,767 149,780FINANCIAL STATEMENTS AND SUPPLEMENTSThe Notes on pages 103 to 137 form an integral part of these Consolidated Financial Statements.

102 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial StatementsCONSOLIDATED STATEMENT OF CASH FLOWS$ MILLIONNOTES 2012 2011 2010Cash flow from operating activitiesIncome for the period 26,840 31,185 20,474Adjustment for:Current taxation 22,722 23,009 16,384Interest expense (net) 1,543 1,164 842Depreciation, depletion and amortisation 14,615 13,228 15,595Net gains on sale of assets (4,228) (4,485) (3,276)Increase in inventories (1,746) (1,930) (2,888)Decrease/(increase) in accounts receivable 14,145 (10,109) (11,931)(Decrease)/increase in accounts payable and accrued liabilities (9,008) 5,568 8,890Share of profit of equity-accounted investments (8,948) (8,737) (5,953)Dividends received from equity-accounted investments 10,573 9,681 6,519Deferred taxation and decommissioning and other provisions 461 1,768 (1,934)Other 201 (949) (10)Net cash from operating activities (pre-tax) 67,170 59,393 42,712Taxation paid (21,030) (22,622) (15,362)Net cash from operating activities 46,140 36,771 27,350Cash flow from investing activitiesCapital expenditure 4 (32,576) (26,301) (26,940)Investments in equity-accounted investments 4 (3,028) (1,886) (2,050)Proceeds from sale of assets 6,346 6,990 3,325Proceeds from sale of equity-accounted investments 698 468 3,591Proceeds from (purchases)/sale of securities (net) (86) 90 (34)Interest received 193 196 136Net cash used in investing activities (28,453) (20,443) (21,972)Cash flow from financing activitiesNet (decrease)/increase in debt with maturity period within three months (165) (3,724) 4,647Other debt:New borrowings 5,108 1,249 7,849Repayments (4,960) (4,649) (3,240)Interest paid (1,428) (1,665) (1,312)Change in non-controlling interest 23 8 381Cash dividends paid to:Royal Dutch Shell plc shareholders 24 (7,390) (6,877) (9,584)Non-controlling interest (292) (438) (395)Repurchases of shares (1,492) (1,106) –Shares held in trust: net (purchases)/sales and dividends received (34) (929) 187Net cash used in financing activities (10,630) (18,131) (1,467)Currency translation differences relating to cash and cash equivalents 201 (349) (186)Increase/(decrease) in cash and cash equivalents 15 7,258 (2,152) 3,725Cash and cash equivalents at January 1 11,292 13,444 9,719Cash and cash equivalents at December 31 18,550 11,292 13,444The Notes on pages 103 to 137 form an integral part of these Consolidated Financial Statements.

eports.shell.com Shell Annual Report and Form 20-F 2012 103Consolidated Financial Statements > Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS1 BASIS OF PREPARATIONUnder the provisions of the Companies Act 2006 and Article 4 of the International Accounting Standards (IAS) Regulation, the ConsolidatedFinancial Statements of Royal Dutch Shell plc (the Company) and its subsidiaries (collectively known as Shell) have been prepared in accordancewith International Financial Reporting Standards (IFRS) as adopted by the European Union. As applied to Shell, there are no material differencesfrom IFRS as issued by the International Accounting Standards Board (IASB); therefore, the Consolidated Financial Statements have beenprepared in accordance with IFRS as issued by the IASB.As described in the accounting policies in Note 2, the Consolidated Financial Statements have been prepared under the historical cost conventionexcept for certain items measured at fair value. Those accounting policies have been applied consistently in all periods presented and there wereno material changes during 2012.The Consolidated Financial Statements were approved and authorised for issue by the Board of Directors on March 13, 2013.Accounting standards not yet adoptedRevised IAS 19 Employee Benefits was issued during 2011 and will be adopted, with retrospective effect, from 2013. The revision eliminates theuse of the corridor method of accounting for actuarial gains and losses arising in connection with defined benefit plans and introduces changes tothe way in which such plans are accounted for in income and other comprehensive income. As presented in Note 18, unrecognised net actuariallosses and past service costs were $19,266 million at December 31, 2012; after deferred taxation impacts of $5,521 million, Shell’s total equitywould have been reduced by $13,745 million had the revised standard been applied at that date. The impact of the change on Shell’s income for2011 and 2012 is not significant.IFRS 10 Consolidated Financial Statements, IFRS11Joint Arrangements, IFRS12Disclosure of Interests in Other Entities and revised standardsIAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures were issued during 2011 and will be adopted in2013. The standards reinforce the principles for determining when an investor controls another entity, amend in certain cases the accounting forarrangements where an investor has joint control and introduce changes to certain disclosures. The impact of the changes on the accounting forShell’s interests is not significant.IFRS 13 Fair Value Measurement was issued during 2011 and will be adopted, with prospective effect, from 2013. The standard affects nearlyall instances where assets and liabilities are currently recognised or disclosed at fair value, primarily by refining the measurement concept torepresent an asset or liability’s exit value. The standard also introduces certain additional considerations to the measurement process. The impactof the changes for Shell is not significant.Revised standards IAS 32 Financial Instruments: Presentation and IFRS 7 Financial Instruments: Disclosures were issued during 2011 and will beadopted, with retrospective effect, in 2014 and 2013 respectively. The revisions amend the requirements for the offsetting of certain financialassets and financial liabilities and related disclosures. The impact of the changes is currently under review, although adoption of these revisedstandards will not affect Shell’s income for the period or total equity.IFRS 9 Financial Instruments, as issued in 2009 and revised in 2010, is required to be adopted by 2015. The standard’s impact on Shell isprincipally limited to its investments in securities, some of which may be measured differently under the standard; the full impact of the changes inaccounting for financial instruments will not be known until the IASB’s project has been completed.2 ACCOUNTING POLICIESNature of the Consolidated Financial StatementsThe Consolidated Financial Statements are presented in US dollars (dollars) and include the financial statements of the Company and itssubsidiaries, being those companies over which the Company, either directly or indirectly, has control through a majority of the voting rights orthe right to exercise control or to obtain the majority of the benefits and be exposed to the majority of the risks.FINANCIAL STATEMENTS AND SUPPLEMENTSSubsidiaries are consolidated from the date on which control is obtained until the date that such control ceases, using consistent accountingpolicies. All inter-company balances and transactions, including unrealised profits arising from such transactions, are eliminated. Unrealisedlosses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Non-controlling interest representsthe proportion of income, other comprehensive income and net assets in subsidiaries that is not attributable to the Company’s shareholders.Nature of operations and segmental reportingShell is engaged in the principal aspects of the oil and gas industry in more than 70 countries and reports its business through three segments.Upstream combines the operating segments Upstream International and Upstream Americas, which have similar characteristics and are engagedin exploring for and recovering crude oil and natural gas; the liquefaction and transportation of gas; the extraction of bitumen from oil sands that

104 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 2 continued]is converted into synthetic crude oil; and wind energy. Downstream is engaged in manufacturing; distribution and marketing activities for oilproducts and chemicals; alternative energy (excluding wind); and CO 2 management. Corporate represents the key support functions, comprisingholdings and treasury, headquarters, central functions and Shell’s self-insurance activities. Integrated within the Upstream and Downstreamsegments are Shell’s trading activities. Sales between segments are based on prices generally equivalent to commercially available prices.Segment earnings are presented on a current cost of supplies basis (CCS earnings). On this basis, the purchase price of volumes sold during the periodis based on the current cost of supplies during the same period after making allowance for the tax effect. CCS earnings therefore exclude the effect ofchanges in the oil price on inventory carrying amounts. Net capital investment is defined as capital expenditure as reported in the ConsolidatedStatement of Cash Flows, adjusted for: proceeds from disposals; exploration expense excluding exploration wells written off; investments in equityaccountedinvestments; and leases and other items. CCS earnings and net capital investment information are the dominant measures used by the ChiefExecutive Officer for the purposes of making decisions about allocating resources and assessing performance.Revenue recognitionRevenue from sales of oil, natural gas, chemicals and all other products is recognised at the fair value of consideration received or receivable,after deducting sales taxes, excise duties and similar levies, when the significant risks and rewards of ownership have been transferred, which iswhen title passes to the customer. For sales by Upstream operations, this generally occurs when product is physically transferred into a vessel,pipe or other delivery mechanism; for sales by refining operations, it is either when product is placed onboard a vessel or offloaded from thevessel, depending on the contractually agreed terms; and for wholesale sales of oil products and chemicals it is either at the point of delivery orthe point of receipt, depending on contractual conditions.Revenue resulting from the production of oil and natural gas from properties in which Shell has an interest with partners in joint ventures isrecognised on the basis of Shell’s working interest (entitlement method). Revenue resulting from the production of oil and natural gas underproduction-sharing contracts is recognised for those amounts relating to Shell’s cost recoveries and Shell’s share of the remaining production.Gains and losses on derivative contracts and the revenue and costs associated with other contracts that are classified as held for trading purposesare reported on a net basis in the Consolidated Statement of Income. Purchases and sales of hydrocarbons under exchange contracts that arenecessary to obtain or reposition feedstock for refinery operations are presented net in the Consolidated Statement of Income.Property, plant and equipment and intangible assetsA – RECOGNITIONProperty, plant and equipment comprise assets owned by Shell, assets held by Shell under finance leases and assets operated by Shell as contractor inproduction-sharing contracts. They include rights and concessions in respect of properties with proved reserves (proved properties) and with noproved reserves (unproved properties). Property, plant and equipment, including expenditure on major inspections, and intangible assets are initiallyrecognised in the Consolidated Balance Sheet at cost where it is probable that they will generate future economic benefits. This includes capitalisationof decommissioning and restoration costs associated with provisions for asset retirement (see “Provisions”), certain development costs (see “Researchand development”) and the effects of associated cash flow hedges (see “Derivative contracts”) as applicable. The accounting for exploration costs isdescribed separately below (see “Exploration costs”). Intangible assets include goodwill, capitalised software costs and trademarks. Interest iscapitalised, as an increase in property, plant and equipment, on major capital projects during construction.Property, plant and equipment and intangible assets are subsequently carried at cost less accumulated depreciation, depletion and amortisation(including any impairment). Gains and losses on disposals are determined by comparing the proceeds with the carrying amounts of assets soldand are recognised in income, within interest and other income.B – DEPRECIATION, DEPLETION AND AMORTISATIONProperty, plant and equipment related to hydrocarbon production activities are depreciated on a unit-of-production basis over the proveddeveloped reserves of the field concerned, except in the case of assets whose useful lives differ from the lifetime of the field, in which case thestraight-line method is applied. Rights and concessions in respect of proved properties are depleted on the unit-of-production basis over the totalproved reserves of the relevant area. Where individually insignificant, unproved properties may be grouped and depreciated based on factorssuch as the average concession term and past experience of recognising proved reserves.Other property, plant and equipment and intangible assets are depreciated and amortised on a straight-line basis over their estimated useful lives,except for goodwill, which is not amortised. They include major inspection costs, which are depreciated over the estimated period before the nextplanned major inspection (three to five years), and the following:Asset typeUpgradersRefineries and chemical plantsRetail service stationsProperty, plant and equipment held under finance leasesSoftwareTrademarksUseful life30 years20 years15 yearslease term5years40 years

eports.shell.com Shell Annual Report and Form 20-F 2012 105Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 2 continued]Estimates of the useful lives and residual values of property, plant and equipment and intangible assets are reviewed annually and adjusted ifappropriate.C – IMPAIRMENTThe carrying amount of goodwill is tested for impairment annually; in addition, assets other than unproved properties (see “Exploration costs”) aretested for impairment whenever events or changes in circumstances indicate that the carrying amounts for those assets may not be recoverable. Ifassets are determined to be impaired, the carrying amounts of those assets are written down to their recoverable amount, which is the higher offair value less costs to sell and value-in-use.Value-in-use is determined as the amount of estimated risk-adjusted discounted future cash flows. For this purpose, assets are grouped into cashgeneratingunits based on separately identifiable and largely independent cash inflows. Estimates of future cash flows used in the evaluation ofimpairment of assets are made using management’s forecasts of commodity prices, market supply and demand, product margins and, in the caseof exploration and production assets, expected production volumes. The latter takes into account assessments of field and reservoir performanceand includes expectations about both proved reserves and volumes that are expected to constitute proved reserves in the future (unprovedvolumes), which are risk-weighted utilising geological, production, recovery and economic projections. Cash flow estimates are risk-adjusted toreflect local conditions as appropriate and discounted at a rate based on Shell’s marginal cost of debt.Impairments, except those related to goodwill, are reversed as applicable to the extent that the events or circumstances that triggered the originalimpairment have changed.Impairment charges and reversals are reported within depreciation, depletion and amortisation.On reclassification as held for sale, the carrying amounts of intangible assets and property, plant and equipment are also reviewed and, whereappropriate, written down to their fair value less costs to sell. No further provision for depreciation, depletion or amortisation is charged.Exploration costsOil and natural gas exploration costs are accounted for under the successful efforts method: exploration costs are recognised in income whenincurred, except that exploratory drilling costs are included in property, plant and equipment pending determination of proved reserves.Exploration costs capitalised in respect of exploration wells that are more than 12 months old are written off unless (a) proved reserves arebooked, or (b) (i) they have found commercially producible quantities of reserves, and (ii) they are subject to further exploration or appraisalactivity in that either drilling of additional exploratory wells is underway or firmly planned for the near future or other activities are beingundertaken to sufficiently progress the assessing of reserves and the economic and operating viability of the project.Joint ventures and associatesArrangements under which Shell has contractually agreed to share control with another party or parties are joint ventures, which may beincorporated (jointly controlled entities) or unincorporated (jointly controlled assets). Investments in entities over which Shell has the right toexercise significant influence but not control are classified as associates.Interests in jointly controlled entities and associates are accounted for using the equity method, under which the investment is initially recognisedat cost and subsequently adjusted for the Shell share of post-acquisition income less dividends received and the Shell share of othercomprehensive income and other movements in equity, together with any loans of a long-term investment nature. Interests in jointly controlledassets are recognised by including the Shell share of assets, liabilities, income and expenses on a line-by-line basis. Where necessary,adjustments are made to the financial statements of joint ventures and associates to bring the accounting policies used into line with those of Shell.In an exchange of assets and liabilities for an interest in a jointly controlled entity, the non-Shell share of any excess of the fair value of the assetsand liabilities transferred over the pre-exchange carrying amounts is recognised in income. Unrealised gains on other transactions between Shelland its joint ventures and associates are eliminated to the extent of Shell’s interest in them; unrealised losses are treated similarly but may alsoresult in an assessment of whether the asset transferred is impaired.InventoriesInventories are stated at cost or net realisable value, whichever is lower. Cost comprises direct purchase costs (including transportation), cost ofproduction and manufacturing and taxes, and is determined using the first-in, first-out (FIFO) method for oil and chemicals and by the weightedaverage cost method for materials.Income taxesThe charge for current tax is calculated based on the income reported by the Company and its subsidiaries, as adjusted for items that arenon-taxable or disallowed and using rates that have been enacted or substantively enacted by the balance sheet date.FINANCIAL STATEMENTS AND SUPPLEMENTSDeferred taxation is determined, using the liability method, on temporary differences arising between the tax bases of assets and liabilities andtheir carrying amounts in the Consolidated Balance Sheet.Deferred tax assets and liabilities are calculated using the enacted or substantively enacted rates that are expected to apply when the asset orliability is recovered. They are not recognised where they arise on the initial recognition of an asset or liability in a transaction (other than in a

106 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 2 continued]business combination) that, at the time of the transaction, affects neither accounting nor taxable profit, or in respect of taxes on possible futuredistributions of retained earnings of subsidiaries and equity-accounted investments where the timing of the distribution can be controlled by Shelland it is probable that the retained earnings will be reinvested by the companies concerned.Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporarydifferences can be utilised.Income taxes are recognised in income except when they relate to items recognised in other comprehensive income, in which case the tax is alsorecognised in other comprehensive income. Income tax assets and liabilities are presented separately in the Consolidated Balance Sheet exceptwhere there is a right of set-off within fiscal jurisdictions and an intention to settle such balances on a net basis.Employee benefitsA – EMPLOYEE RETIREMENT PLANS (PENSIONS)Retirement plans that define the amount of pension benefit to be provided (“defined benefit plans”) generally are funded by payments toindependent trusts. Where a plan is not funded, a provision is made. Valuations of both funded and unfunded plans are carried out annually byindependent actuaries, using the projected unit credit method to calculate the defined benefit obligation. Pension expense principally representsthe increase in the actuarial present value of the obligation for pension benefits based on employee service during the year and the interest on thisobligation in respect of employee service in previous years, net of the expected return on plan assets.Actuarial gains and losses are accounted for using the corridor method. Under this method, to the extent that any cumulative unrecognisedactuarial gain or loss exceeds 10% of the greater of the present value of the defined benefit obligation and the fair value of plan assets, thatexcess is recognised in income over the expected average remaining working lives of the employees participating in the plan. Otherwise, theactuarial gain or loss is not recognised.For retirement plans where benefits depend solely on the amount contributed to the employee’s account and the investment returns earned onthese contributions (“defined contribution plans”), pension expense is the amount of employer contributions payable for the period.B – RETIREMENT BENEFITS OTHER THAN PENSIONSRetirement healthcare and life insurance benefits are provided to certain retirees, the entitlement to which is usually dependent upon the employeeremaining in service up to retirement age and the completion of a minimum service period. These plans are not funded and a provision is made.Valuations of benefits are carried out annually by independent actuaries, using the projected unit credit method to calculate the defined benefitobligation.The expected cost of retirement benefits other than pensions is accrued over the periods employees render service. Actuarial gains and losses areaccounted for using the corridor method, as described above.C – SHARE-BASED COMPENSATION PLANSThe fair value of share-based compensation for the Performance Share Plan (the main equity-settled plan) is estimated using a Monte Carlo pricingmodel and is recognised in income from the date of grant over the vesting period with a corresponding increase directly in equity. The periodicchange in the fair value of share-based compensation for cash-settled plans is recognised in income with a corresponding change in liabilities.LeasesAgreements under which payments are made to owners in return for the right to use an asset for a period are accounted for as leases. Leases thattransfer substantially all the risks and rewards of ownership are recognised at the commencement of the lease term as finance leases withinproperty, plant and equipment and debt at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments.Finance lease payments are apportioned between interest expense and repayments of debt. All other leases are recorded as operating leases,and the cost is recognised in income on a straight-line basis.Financial instruments and other derivative contractsA – FINANCIAL ASSETSInvestments in securitiesInvestments in securities (also referred to as “securities”) comprise equity and debt securities classified on initial recognition as available-for-saleand are carried at fair value, except where their fair value cannot be measured reliably, in which case they are carried at cost, less anyimpairment. Unrealised holding gains and losses other than impairments are recognised in other comprehensive income, except for translationdifferences arising on foreign currency debt securities, which are recognised in income. On maturity or disposal, net gains and losses previouslydeferred in accumulated other comprehensive income are recognised in income.Interest income on debt securities is recognised in income using the effective interest method. Dividends on equity securities are recognised inincome when receivable.

eports.shell.com Shell Annual Report and Form 20-F 2012 107Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 2 continued]Cash and cash equivalentsCash and cash equivalents comprise cash at bank and in hand, including offsetting bank overdrafts, short-term deposits, money market funds andsimilar instruments that have a maturity of three months or less at the date of acquisition.ReceivablesReceivables are recognised initially at fair value based on amounts exchanged and subsequently at amortised cost less any impairment.B – FINANCIAL LIABILITIESDebt and accounts payable are recognised initially at fair value based on amounts exchanged, net of transaction costs, and subsequently atamortised cost, except for fixed rate debt subject to fair value hedging, which is remeasured for the hedged risk (see “Derivative contracts”).Interest expense on debt is accounted for using the effective interest method and, other than interest capitalised, is recognised in income.C – DERIVATIVE CONTRACTSDerivatives are used in the management of interest rate risk, foreign currency risk and commodity price risk, and in the management of foreigncurrency cash balances. These derivative contracts are recognised at fair value.Those derivatives qualifying and designated as hedges are either: (i) a “fair value” hedge of the change in fair value of a recognised asset orliability or an unrecognised firm commitment, or (ii) a “cash flow” hedge of the change in cash flows to be received or paid relating to arecognised asset or liability or a highly probable forecasted transaction.A change in the fair value of a hedging instrument designated as a fair value hedge is recognised in income, together with the consequentialadjustment to the carrying amount of the hedged item. The effective portion of a change in fair value of a derivative designated as a cash flowhedge is recognised in other comprehensive income until the hedged transaction occurs; any ineffective portion is recognised in income. Wherethe hedged item is a non-financial asset or liability, the amount in accumulated other comprehensive income is transferred to the initial carryingamount of the asset or liability; for other hedged items, the amount in accumulated other comprehensive income is recognised in income when thehedged transaction affects income.All relationships between hedging instruments and hedged items are documented, as well as risk management objectives and strategies forundertaking hedge transactions. The effectiveness of a hedge is also continually assessed and, when it ceases, hedge accounting is discontinued.Gains and losses on derivatives not qualifying and designated as hedges, including forward sale and purchase contracts for commodities intrading operations that may be settled by the physical delivery or receipt of the commodity, are recognised in income.Unless designated as hedging instruments, contracts to sell or purchase non-financial items that can be settled net as if the contracts were financialinstruments and that do not meet expected own use requirements (typically, forward sale and purchase contracts for commodities in tradingoperations), and contracts that are or contain written options, are recognised at fair value; associated gains and losses are recognised in income.Derivatives embedded within contracts that are not already required to be recognised at fair value, and that are not closely related to the hostcontract in terms of economic characteristics and risks, are separated from their host contract and recognised at fair value; associated gains andlosses are recognised in income.Fair value measurementsFair value measurements are estimates of the amounts for which assets or liabilities (generally financial instruments and other derivative contracts)could be exchanged at the measurement date, based on the assumption that such exchanges take place between knowledgeable, unrelatedparties in unforced transactions. Where available, fair value measurements are derived from prices quoted in active markets for identical assetsor liabilities. In the absence of such information, other observable inputs are used to estimate fair value. Inputs derived from external sources arecorroborated or otherwise verified, as appropriate. In the absence of publicly available information, fair value is determined using estimationtechniques that take into account market perspectives relevant to the asset or liability, in as far as they can reasonably be ascertained, based onpredominantly unobservable inputs. For derivative contracts where publicly available information is not available and for share-basedcompensation plans, fair value estimations are generally determined using models and other valuation methods, the key inputs for which includefuture prices, volatility, price correlation, counterparty credit risk and market liquidity, as appropriate; for other assets and liabilities, fair valueestimations are generally based on the net present value of expected future cash flows.FINANCIAL STATEMENTS AND SUPPLEMENTSProvisionsProvisions are recognised at the balance sheet date at management’s best estimate of the expenditure required to settle the present obligation.Non-current amounts are discounted at a rate intended to reflect the time value of money. Specific details for decommissioning and restorationcosts are described below. The carrying amounts of provisions are regularly reviewed and adjusted for new facts or changes in law ortechnology.Provisions for decommissioning and restoration costs, which arise principally in connection with hydrocarbon production facilities and pipelines,are measured on the basis of current requirements, technology and price levels; the present value is calculated using amounts discounted over theuseful economic life of the assets. The liability is recognised (together with a corresponding amount as part of the related property, plant and

108 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 2 continued]equipment) once an obligation crystallises in the period when a reasonable estimate can be made. The effects of changes resulting from revisionsto the timing or the amount of the original estimate of the provision are reflected on a prospective basis, generally by adjustment to the carryingamount of the related property, plant and equipment.Other provisions are recognised in income in the period in which an obligation arises and the amount can be reasonably estimated. Provisionsare measured based on current legal requirements and existing technology where applicable. Recognition of any joint and several liability isbased on management’s best estimate of the final pro rata share of the liability. Provisions are determined independently of expected insurancerecoveries. Recoveries are recognised and reported as separate events and brought into account when virtually certain of realisation.Shares held in trustShares in the Company held by employee share ownership trusts are not included in assets but are reflected at cost as a deduction from equity asshares held in trust.Research and developmentDevelopment costs that are expected to generate probable future economic benefits are capitalised as intangible assets. All other research anddevelopment expenditure is recognised in income as incurred.Acquisitions and disposals of interests in a businessAssets acquired and liabilities assumed when control is obtained over a business are recognised at their fair value at the date of the acquisition;the amount of the purchase consideration above this value is recognised as goodwill, with any non-controlling interest recognised as theproportionate share of the identifiable net assets. Acquisitions of the non-controlling interest in subsidiaries and disposals of shares in subsidiarieswhile retaining control are accounted for as transactions within equity. The difference between the purchase consideration or disposal proceedsand the relevant proportion of the non-controlling interest is reported in retained earnings as a movement in equity attributable to the Company’sshareholders.Currency translationForeign currency transactions are translated using the exchange rate at the dates of the transactions or valuation where items are re-measured.Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at quarter-end exchange rates ofmonetary assets and liabilities denominated in foreign currencies (including those in respect of inter-company balances unless related to quasiequityloans) are recognised in income, except when deferred in equity as qualifying cash flow hedges, and presented within interest and otherincome or within purchases where not related to financing. Share capital issued in currencies other than the dollar is translated at the exchangerate at the date of issue.On consolidation, assets and liabilities of non-dollar entities are translated to dollars at year-end rates of exchange, while their statements ofincome, other comprehensive income and cash flows are translated at quarterly average rates. The resulting translation differences arerecognised as currency translation differences within other comprehensive income. Upon divestment of all or part of an interest in, or uponliquidation of, an entity, cumulative currency translation differences related to that entity are generally recognised in income.Consolidated Statement of Income presentationPurchases reflect all costs related to the acquisition of inventories, the effects of the changes therein, and include supplies used for conversion intofinished or intermediate products. Production and manufacturing expenses are the costs of operating, maintaining and managing production andmanufacturing assets. Selling, distribution and administrative expenses include direct and indirect costs of marketing and selling products.3 KEY ACCOUNTING ESTIMATES AND JUDGEMENTSIn order to prepare the Consolidated Financial Statements in conformity with IFRS, management has to make estimates and judgements. Thematters described below are considered to be the most important in understanding the judgements that are involved in preparing these statementsand the uncertainties that could impact the amounts reported in the results of operations, financial condition and cash flows. Shell’s accountingpolicies are described in Note 2.Estimation of proved oil and gas reservesUnit-of-production depreciation, depletion and amortisation charges are principally measured based on management’s estimates of proveddeveloped oil and gas reserves. Estimates of proved reserves are also used in the determination of impairment charges and reversals. Also,exploration drilling costs are capitalised pending the results of further exploration or appraisal activity, which may take several years to completeand before any related proved reserves can be booked.Proved reserves are estimated by reference to available geological and engineering data and only include volumes for which access to market isassured with reasonable certainty. Estimates of proved reserves are inherently imprecise, require the application of judgement and are subject toregular revision, either upward or downward, based on new information such as from the drilling of additional wells, observation of long-termreservoir performance under producing conditions and changes in economic factors, including product prices, contract terms or developmentplans.

eports.shell.com Shell Annual Report and Form 20-F 2012 109Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 3 continued]Changes to estimates of proved developed reserves affect prospectively the amounts of depreciation, depletion and amortisation charged and,consequently, the carrying amounts of exploration and production assets. It is expected, however, that in the normal course of business thediversity of the asset portfolio will limit the effect of such revisions. The outcome of, or assessment of plans for, exploration or appraisal activitymay result in the related capitalised exploration drilling costs being recorded in income in that period.Information about the carrying amounts of exploration and production assets and the amounts charged to income, including depreciation,depletion and amortisation, is presented in Note 9.Impairment of assetsFor the purposes of determining whether impairment of assets has occurred, and the extent of any impairment or its reversal, the key assumptionsmanagement uses in estimating risk-adjusted future cash flows for value-in-use measures are future oil and gas prices, expected productionvolumesandrefiningmarginsappropriatetothelocalcircumstancesandenvironment.Theseassumptionsandthejudgementsofmanagementthat are based on them are subject to change as new information becomes available. Changes in economic conditions can also affect the rateused to discount future cash flow estimates.Future price assumptions tend to be stable because management does not consider short-term increases or decreases in prices as being indicativeof long-term levels, but they are nonetheless subject to change. Expected production volumes, which comprise proved reserves and unprovedvolumes, are used for impairment testing because management believes this to be the most appropriate indicator of expected future cash flows.As discussed in “Estimation of proved oil and gas reserves”, reserves estimates are inherently imprecise. Furthermore, projections about unprovedvolumes are based on information that is necessarily less robust than that available for mature reservoirs. Due to the nature and geographicalspread of the business activity in which those assets are used, it is typically not practicable to estimate the likelihood or extent of impairmentsunder different sets of assumptions. The discount rate applied is reviewed annually, although it has been stable in recent years.Changes in assumptions could affect the carrying amounts of assets, and impairment charges and reversals will affect income.Information about the carrying amounts of assets and impairments is presented in Notes 8 and 9.Defined benefit pension plansThe amounts reported for employee retirement plans are presented in Note 18. Defined benefit plan assets and obligations are subject tosignificant volatility as market values and actuarial assumptions change. Under the accounting policy applied, volatility in the amounts recognisedin the Consolidated Financial Statements is reduced as the methodology provides for unexpected changes in the amount of plan assets andbenefit obligation (actuarial gains and losses) to be amortised over the expected average remaining working lives of the employees participatingin the plan rather than being recognised immediately in the Consolidated Financial Statements.Local trustees manage the pension funds and set the required contributions based on independent actuarial valuation in accordance with localregulations rather than the IFRS measures.Pension expense for these plans principally represents the change in actuarial present value of the obligation for benefits based on employeeservice during the year and the interest on the obligation in respect of employee service in previous years, net of the expected return on planassets. The calculations are sensitive to changes in the assumptions made regarding future outcomes. Substantial judgement is required indetermining the assumptions, which vary for the different plans to reflect local conditions but are determined under a common process inconsultation with independent actuaries. The principal assumptions and their bases include:▪ rates of increase in pensionable remuneration: historical outturns and management’s long-term expectation;▪ mortality rates: the latest available standard mortality tables for the individual countries concerned. The assumptions for each country arereviewed each year and are adjusted where necessary to reflect changes in fund experience and actuarial recommendations;▪ discount rates used to convert future cash flows to current values: prevailing long-term AA corporate bond yields, which can be volatile, chosento match the duration of the relevant obligation; and▪ expected rates of return on plan assets: a projection of real long-term bond yields and an equity risk premium, which are combined with localinflation assumptions and applied to the actual asset mix of each plan. The amount of the expected return on plan assets is calculated using theexpected rate of return for the year and the fair value of assets at the beginning of the year.The assumptions are reviewed annually. The weighted average values applicable for the principal plans are presented in Note 18, together withinformation on sensitivities.FINANCIAL STATEMENTS AND SUPPLEMENTSDecommissioning and restoration costsProvisions are recognised for the future decommissioning and restoration of hydrocarbon production facilities and pipelines at the end of theireconomic lives. The estimated cost is recognised in income over the life of the proved developed reserves on a unit-of-production basis or on astraight-line basis, as applicable. Changes in the estimates of costs to be incurred, proved developed reserves or in the rate of production willtherefore impact income, generally over the remaining economic life of the related assets.

110 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 3 continued]Estimates of the amounts of provisions recognised are based on current legal and constructive requirements, technology and price levels. Becauseactual outflows can differ from estimates due to changes in laws, regulations, public expectations, technology, prices and conditions, and cantake place many years in the future, the carrying amounts of provisions are regularly reviewed and adjusted to take account of such changes. Thediscount rate applied is reviewed annually, although it has been stable in recent years.Information about decommissioning and restoration provisions is presented in Note 19.TaxationTax liabilities are recognised when it is considered probable that there will be a future outflow of funds to a taxing authority. In such cases,provision is made for the amount that is expected to be settled, where this can be reasonably estimated. This requires the application ofjudgement as to the ultimate outcome, which can change over time depending on facts and circumstances. A change in estimate of the likelihoodof a future outflow and/or in the expected amount to be settled would be recognised in income in the period in which the change occurs.Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable. This involves an assessment ofwhen those deferred tax assets are likely to reverse, and a judgement as to whether or not there will be sufficient taxable profits available to offsetthe tax assets when they do reverse. This requires assumptions regarding future profitability and is therefore inherently uncertain. To the extentassumptions regarding future profitability change, there can be an increase or decrease in the amounts recognised in respect of deferred taxassets as well as in the amounts recognised in income in the period in which the change occurs.Information about taxation charges, deferred tax liabilities and recognised and unrecognised deferred tax assets is presented in Note 17.4 SEGMENT INFORMATIONA – Income information by business segment2012 $ MILLIONUpstream Downstream Corporate TotalRevenue and other incomeRevenueThird party 43,431 423,638 84 467,153Inter-segment 51,119 772 –Share of profit/(loss) of equity-accounted investments 8,001 1,240 (293) 8,948Interest and other income 4,836 305 458 5,599Total 481,700Earnings on a current cost of supplies basis 22,162 5,350 (209) 27,303Other itemsDepreciation, depletion and amortisation charge of which: 11,387 3,083 145 14,615Impairment losses 980 138 3 1,121Impairment reversals – 24 – 24Interest expense 774 89 894 1,757Taxation charge/(credit) 23,630 1,129 (1,310) 23,4492011 $ MILLIONUpstream Downstream Corporate TotalRevenue and other incomeRevenueThird party 42,260 427,864 47 470,171Inter-segment 49,431 782 –Share of profit/(loss) of equity-accounted investments 7,127 1,896 (286) 8,737Interest and other income 4,150 1,106 325 5,581Total 484,489Earnings on a current cost of supplies basis 24,455 4,289 86 28,830Other itemsDepreciation, depletion and amortisation charge of which: 8,827 4,251 150 13,228Impairment losses 325 1,194 – 1,519Impairment reversals – 4 – 4Interest expense 756 83 534 1,373Taxation charge/(credit) 23,994 1,632 (1,151) 24,475

eports.shell.com Shell Annual Report and Form 20-F 2012 111Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 4 continued]2010 $ MILLIONUpstream Downstream Corporate TotalRevenue and other incomeRevenueThird party 32,395 335,604 57 368,056Inter-segment 35,803 612 –Share of profit/(loss) of equity-accounted investments 4,900 1,167 (114) 5,953Interest and other income 3,616 418 109 4,143Total 378,152Earnings on a current cost of supplies basis 15,935 2,950 91 18,976Other itemsDepreciation, depletion and amortisation charge of which: 11,144 4,254 197 15,595Impairment losses 1,724 1,192 39 2,955Impairment reversals 40 8 – 48Interest expense 663 84 249 996Taxation charge/(credit) 14,822 998 (950) 14,870Segment earnings on a current cost of supplies basis reconcile to income for the period as follows:$ MILLION2012 2011 2010Total segment earnings on a current cost of supplies basis 27,303 28,830 18,976Current cost of supplies adjustment:Purchases (514) 2,825 1,789Taxation 165 (789) (510)Share of (loss)/profit of equity-accounted investments (114) 319 219Income for the period 26,840 31,185 20,474B – Net capital investment and equity-accounted investments by business segmentNET CAPITAL INVESTMENT$ MILLION2012 2011 2010Net capital investmentUpstream 25,320 19,083 21,222Downstream 4,275 4,342 2,358Corporate 208 78 100Total 29,803 23,503 23,680Proceeds from disposals 6,958 7,548 6,882Capital investment 36,761 31,051 30,562Exploration expense, excluding exploration wells written off (2,114) (1,462) (1,214)Investments in equity-accounted investments (3,028) (1,886) (2,050)Leases and other adjustments 957 (1,402) (358)Capital expenditure 32,576 26,301 26,940EQUITY-ACCOUNTED INVESTMENTS$ MILLIONDec 31,2012Dec 31,2011Upstream 21,766 21,683Downstream 16,576 16,303Corporate 8 4Total 38,350 37,990FINANCIAL STATEMENTS AND SUPPLEMENTS

112 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 4 continued]C – Information by geographical area2012 $ MILLIONAsia,EuropeOceania,AfricaUSAOtherAmericasTotalThird-party revenue, by origin 184,223 156,310 91,571 35,049 467,153Intangible assets, property, plant and equipment and equity-accountedinvestments at December 31 31,275 91,602 51,865 40,371 215,1132011 $ MILLIONAsia,EuropeOceania,AfricaUSAOtherAmericasTotalThird-party revenue, by origin 187,498 148,260 91,946 42,467 470,171Intangible assets, property, plant and equipment and equity-accountedinvestments at December 31 27,509 83,409 44,234 39,440 194,5922010 $ MILLIONAsia,EuropeOceania,AfricaUSAOtherAmericasTotalThird-party revenue, by origin 137,359 110,955 77,660 42,082 368,056Intangible assets, property, plant and equipment and equity-accountedinvestments at December 31 28,580 76,553 39,934 36,091 181,1585 EMPLOYEES, DIRECTORS AND SENIOR MANAGEMENTA – Employee expense$ MILLION2012 2011 2010Remuneration 11,133 11,158 10,667Social law taxes 789 774 758Retirement benefits (see Note 18) 2,502 1,804 1,980Share-based compensation (see Note 22) 909 754 701Total 15,333 14,490 14,106In addition, redundancy costs in 2012 were $114 million (2011: $373 million; 2010: $142 million). See also Note 19.B – Average employee numbersTHOUSAND2012 2011 2010Upstream 26 27 26Downstream 48 51 59Corporate 13 12 12Total 87 90 97Employees working in business service centres are included in the Corporate segment.

eports.shell.com Shell Annual Report and Form 20-F 2012 113Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 5 continued]C – Remuneration of Directors and Senior Management$ MILLION2012 2011 2010Short-term benefits 24.8 27.3 27.8Retirement benefits 3.4 3.2 2.9Share-based compensation 47.2 36.0 22.6Realised gains on exercise of share options 5.0 2.1 2.6Directors and Senior Management comprise the members of the Executive Committee and the Non-executive Directors of the Company.Short-term benefits comprise salaries and fees, annual bonuses (recognised in the period for which performance is assessed), other benefits andemployer social security contributions. Retirement benefits comprise employer contributions.Share-based compensation in 2012 includes exceptional costs recognised in respect of an Executive Director who stood down during the year.In addition to the amounts presented above for 2012 are termination and related amounts of $5.9 million in respect of the Executive Director whostood down during the year and gains of $2.9 million arising on the exercise of share options after standing down.6 INTEREST AND OTHER INCOME$ MILLION2012 2011 2010Interest income 214 209 153Dividend income (from investments in securities) 799 830 399Net gains on sale of assets 4,228 4,485 3,276Foreign exchange gains/(losses) on financing activities 194 63 (17)Other 164 (6) 332Total 5,599 5,581 4,143Net gains on sale of assets in 2012 arose from divestments of interests and other portfolio transactions including Upstream interests in Australia,Nigeria and the USA (2011: Upstream interests in the USA, Nigeria, Brazil and Cameroon and Downstream interests in Chile; 2010: Upstreaminterests in Australia, Nigeria and the USA).Other net foreign exchange losses of $67 million (2011: $31 million losses; 2010: $18 million gains) are included in purchases.7 INTEREST EXPENSE$ MILLION2012 2011 2010Interest incurred and similar charges 1,251 1,292 1,231Less: interest capitalised (567) (674) (969)Other net fair value losses/(gains) on fair value hedges of debt 210 (83) (13)Accretion expense (see Note 19) 863 838 747Total 1,757 1,373 996The rate applied in determining the amount of interest capitalised in 2012 was 3% (2011: 3%; 2010: 3%).FINANCIAL STATEMENTS AND SUPPLEMENTS

114 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements8 INTANGIBLE ASSETS2012 $ MILLIONGoodwillSoftwareand other TotalCostAt January 1 2,980 4,411 7,391Additions – 228 228Sales, retirements and other movements (51) (166) (217)Currency translation differences 26 74 100At December 31 2,955 4,547 7,502Depreciation, depletion and amortisation, including impairmentsAt January 1 360 2,510 2,870Charge for the year 39 336 375Sales, retirements and other movements (63) (199) (262)Currency translation differences 4 45 49At December 31 340 2,692 3,032NetcarryingamountatDecember31 2,615 1,855 4,4702011 $ MILLIONGoodwillSoftwareand other TotalCostAt January 1 3,383 4,429 7,812Additions – 291 291Sales, retirements and other movements (358) (241) (599)Currency translation differences (45) (68) (113)At December 31 2,980 4,411 7,391Depreciation, depletion and amortisation, including impairmentsAt January 1 393 2,380 2,773Charge for the year 31 350 381Sales, retirements and other movements (62) (177) (239)Currency translation differences (2) (43) (45)At December 31 360 2,510 2,870NetcarryingamountatDecember31 2,620 1,901 4,521Goodwill at December 31, 2012 and 2011, principally related to Pennzoil-Quaker State Company, a lubricants business in the Downstreamsegment based largely in North America. For impairment testing purposes, cash flow projections for this business reflected long-term growth ratesthat were assumed to be equal to the average expected inflation rate for the USA (2012: 2.0%; 2011: 2.0%) and were adjusted for a variety ofrisks, in particular volume and margin deterioration. The nominal pre-tax discount rate applied was 6% (2011: 6%).9 PROPERTY, PLANT AND EQUIPMENT2012 $ MILLIONExploration and production assetsExplorationand evaluation ProductionManufacturingand distribution Other TotalCostAt January 1 28,351 175,065 65,412 26,729 295,557Additions 11,754 18,366 2,980 1,913 35,013Sales, retirements and other movements (7,473) 1,939 (1,622) (2,742) (9,898)Currency translation differences 239 3,481 690 671 5,081At December 31 32,871 198,851 67,460 26,571 325,753Depreciation, depletion and amortisation, including impairmentsAt January 1 2,351 96,794 30,377 13,954 143,476Charge for the year 1,218 9,303 2,660 1,059 14,240Sales, retirements and other movements (1,477) (2,163) (1,892) (1,744) (7,276)Currency translation differences 18 2,196 468 338 3,020At December 31 2,110 106,130 31,613 13,607 153,460Net carrying amount at December 31 30,761 92,721 35,847 12,964 172,293

eports.shell.com Shell Annual Report and Form 20-F 2012 115Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 9 continued]2011 $ MILLIONExploration and production assetsExplorationand evaluation ProductionManufacturingand distribution Other TotalCostAt January 1 26,052 166,345 65,908 27,220 285,525Additions 7,971 11,859 3,919 2,950 26,699Sales, retirements and other movements (5,451) (1,363) (3,722) (2,644) (13,180)Currency translation differences (221) (1,776) (693) (797) (3,487)At December 31 28,351 175,065 65,412 26,729 295,557Depreciation, depletion and amortisation, including impairmentsAt January 1 2,095 94,944 30,797 14,984 142,820Charge for the year 595 7,814 3,359 1,079 12,847Sales, retirements and other movements (315) (5,008) (3,353) (1,697) (10,373)Currency translation differences (24) (956) (426) (412) (1,818)At December 31 2,351 96,794 30,377 13,954 143,476Net carrying amount at December 31 26,000 78,271 35,035 12,775 152,081The net carrying amount at December 31, 2012, includes $35,429 million (2011: $24,494 million) of assets in the course of construction. Thisamount excludes exploration and evaluation assets.The minimum contractual commitments for capital expenditure at December 31, 2012, amounted to $9.3 billion (2011: $4.9 billion).Exploration and production assets at December 31, 2012, include rights and concessions in respect of proved and unproved properties of$29,842 million (2011: $26,422 million). Exploration and evaluation assets principally include rights and concessions in respect of unprovedproperties and capitalised exploration drilling costs.The net carrying amounts at December 31 include assets held under finance leases of:$ MILLION2012 2011Exploration and production assets 1,618 1,759Manufacturing and distribution 813 802Other 618 574Total 3,049 3,135The depreciation, depletion and amortisation charge for the year includes impairment losses and reversals as follows:$ MILLION2012 2011 2010Impairment lossesExploration and production assets 940 317 1,620Manufacturing and distribution 49 1,134 1,140Other 93 36 33Total 1,082 1,487 2,793Impairment reversalsExploration and production assets – – 40Manufacturing and distribution 23 4 7Other 1 – 1Total 24 4 48Impairment losses and reversals have been recognised in the year in respect of a number of cash-generating units, although no single instance isindividually significant. Impairment charges were driven generally by changes in development and production plans in Upstream and, in 2011and 2010, by lower refining margins in Downstream. Information on the segments affected is presented in Note 4.FINANCIAL STATEMENTS AND SUPPLEMENTS

116 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 9 continued]Capitalised exploration drilling costs were as follows:$ MILLION2012 2011 2010At January 1 5,298 4,218 3,614Additions pending determination of proved reserves 6,395 4,195 3,141Amounts charged to expense (990) (804) (822)Reclassifications to productive wells on determination of proved reserves (2,748) (2,022) (1,779)Other movements, including acquisitions, disposals and currency translation differences (69) (289) 64At December 31 7,886 5,298 4,218With effect from 2012, amounts charged to expense include expenditures capitalised and expensed in the same year. Comparative informationis reclassified.Exploration drilling costs capitalised for periods greater than one year at December 31, analysed according to the most recent year of activity,are as follows:2012Number$ million of wellsBetween one and five years 2,118 154Between six and ten years 508 36Total 2,626 190Amounts capitalised for periods greater than one year at December 31, 2012, comprise $1,174 million relating to 22 projects where drillingactivities were underway or firmly planned for the future and $1,452 million relating to 22 projects awaiting development concepts, and areanalysed according to the most recent year of activity, as follows:2012Number$ million of projectsBetween one and five years 2,536 41Between six and ten years 90 3Total 2,626 4410 JOINT VENTURES AND ASSOCIATESA – Information on the Shell share of equity-accounted investments$ MILLION2012 2011 2010Jointlycontrolledentities Associates TotalJointlycontrolledentities Associates TotalJointlycontrolledentities Associates TotalRevenue 72,740 39,991 112,731 66,349 36,688 103,037 44,641 27,759 72,400Income for the period 4,071 4,877 8,948 4,781 3,956 8,737 3,643 2,310 5,953$ MILLIONDec 31, 2012 Dec 31, 2011Jointlycontrolledentities Associates TotalJointlycontrolledentities Associates TotalCurrent assets 12,804 7,936 20,740 14,048 7,809 21,857Non-current assets 34,228 27,315 61,543 30,689 27,467 58,156Total assets 47,032 35,251 82,283 44,737 35,276 80,013Current liabilities 9,114 7,498 16,612 8,953 7,078 16,031Non-current liabilities 12,114 15,207 27,321 11,246 14,746 25,992Total liabilities 21,228 22,705 43,933 20,199 21,824 42,023Total assets less total liabilities 25,804 12,546 38,350 24,538 13,452 37,990

eports.shell.com Shell Annual Report and Form 20-F 2012 117Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 10 continued]B – Major investments in joint ventures and associatesDECEMBER 31, 2012Fair valueSegment Name Description Country of incorporation Shell interest (%) ($ million)UpstreamAera Jointly controlled entity USA 52Arrow Jointly controlled entity Australia 50Brunei LNG Associate Brunei 25Brunei Shell Jointly controlled entity Brunei 50NAM Jointly controlled entity The Netherlands 50Nigeria LNG Associate Nigeria 26Oman LNG Associate Oman 30Qatargas 4 LNG Associate Qatar 30Sakhalin Energy Associate Bermuda 28Woodside Associate Australia 23 6,687DownstreamCNOOC and ShellPetrochemicals (Nanhai) Jointly controlled entity China 50Deer Park Jointly controlled entity USA 50Infineum Jointly controlled entity The Netherlands 50Motiva Jointly controlled entity USA 50Raízen Jointly controlled entity Brazil 50Saudi Arabia Petrochemical Jointly controlled entity Saudi Arabia 50Saudi Aramco Shell Refinery Jointly controlled entity Saudi Arabia 50Showa Shell Associate Japan 35 751All shareholdings in the above entities are in ordinary shares or the equivalent and are stated to the nearest percentage point. Fair valueinformation is stated for those associates for which there are published price quotations, and represent the relevant share price on December 31,2012, multiplied by the number of shares held.Although Shell has a 52% investment in Aera, the governing agreements and constitutive documents for this entity do not allow Shell to control thisentity as voting control is either split 50:50 between the shareholders or requires unanimous approval of the shareholders or their representatives.Consequently, this entity has not been consolidated.In 2011, Shell and Cosan S.A. established Raízen, a biofuel venture operating in Brazil. Under the terms of the agreement, Shell’s contributioncomprised cash of $1,699 million and ethanol production technology and other Downstream assets.Shell has other major Upstream joint venture activities that operate as jointly controlled assets.C – Transactions between subsidiaries and equity-accounted investmentsTransactions with equity-accounted investments principally comprise sales and purchases of goods and services in the ordinary course of businessand in total amounted to:$ MILLION2012 2011 2010Charges to equity-accounted investments 51,484 55,280 38,368Charges from equity-accounted investments 44,597 47,615 34,827Balances outstanding at December 31, 2012 and 2011, in respect of the above transactions are presented in Notes 12 and 16.Other arrangements in respect of equity-accounted investments at December 31 were as follows:FINANCIAL STATEMENTS AND SUPPLEMENTS$ BILLION2012 2011Commitments to make purchases from equity-accounted investments 158.9 192.0Amounts guaranteed in respect of equity-accounted investments 2.2 2.2Commitments to provide debt or equity funding to equity-accounted investments 3.8 0.5

118 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements11 INVESTMENTS IN SECURITIESInvestments in securities at December 31, 2012, comprise equity and debt securities. Equity securities principally comprise 15% interests in eachof Malaysia LNG Dua Sendirian Berhad and Malaysia LNG Tiga Sendirian Berhad. Debt securities comprise a portfolio required to be held byShell’s insurance companies as security for their activities.Equity and debt securities carried at fair value totalled $4,623 million at December 31, 2012 (2011: $5,248 million), with the remaindercarried at cost. Of these, $1,342 million (2011: $1,218 million) are measured by reference to prices in active markets for identical assets, and$3,281 million (2011: $4,030 million) are measured by reference to predominantly unobservable inputs. Assets in the latter category, all ofwhich are equity securities, are measured based on expected dividend flows, adjusted for country and other risks as appropriate and discountedto their present value. In the case of the Malaysia LNG investments referred to above, were the oil price assumption used in their valuation to bedecreased by $10 per barrel, their carrying amount would decrease by $230 million (2011: $379 million). Movements in the carrying amountsof investments in securities measured using predominantly unobservable inputs were as follows:$ MILLION2012 2011At January 1 4,030 2,388(Losses)/gains recognised in other comprehensive income (762) 1,633Purchases 16 25Sales (15) (18)Currency translation differences 12 2At December 31 3,281 4,03012 TRADE AND OTHER RECEIVABLES$ MILLIONDec 31, 2012 Dec 31, 2011Current Non-current Current Non-currentTrade receivables 40,210 – 48,307 –Other receivables 8,844 2,542 8,204 3,375Amounts due from equity-accounted investments 3,716 2,630 3,231 2,580Derivative contracts (see Note 21) 9,191 1,882 16,394 1,615Prepayments and deferred charges 3,442 1,937 3,373 1,686Total 65,403 8,991 79,509 9,256The fair value of financial assets included above approximates the carrying amount.Other receivables principally include income tax recoverable (see Note 17), other taxes recoverable and balances due from joint venturepartners.Provisions for impairments deducted from trade and other receivables amounted to $466 million at December 31, 2012 (2011: $544 million).The ageing of trade receivables at December 31 is as follows:$ MILLION2012 2011Not overdue 37,379 44,433Overdue 1–30 days 1,792 2,573Overdue 31–60 days 239 297Overdue 61–90 days 148 99Overdue 91–180 days 156 394Overdue more than 180 days 496 511Total 40,210 48,307Information about credit risk is presented in Note 21.

eports.shell.com Shell Annual Report and Form 20-F 2012 119Consolidated Financial Statements > Notes to the Consolidated Financial Statements13 INVENTORIES$ MILLIONDec 31, 2012 Dec 31, 2011Oil and chemicals 29,217 27,343Materials 1,564 1,633Total 30,781 28,976The cost of inventories recognised in income in 2012 includes net write-downs of $51 million (2011: $151 million net write-downs; 2010:$184 million net reversals).14 CASH AND CASH EQUIVALENTS$ MILLIONDec 31, 2012 Dec 31, 2011Cash 4,498 4,592Short-term bank deposits 5,177 3,260Money market funds and other cash equivalents 8,875 3,440Total 18,550 11,292Included in cash and cash equivalents at December 31, 2012, are amounts totalling $703 million (2011: $557 million) that are subject tocurrency controls or other legal restrictions. Information about credit risk is presented in Note 21.15 DEBT AND LEASE ARRANGEMENTSA–Debt$ MILLIONDec 31, 2012 Dec 31, 2011Debt(excludingfinanceleaseobligations)FinanceleaseobligationsTotalDebt(excludingfinanceleaseobligations)FinanceleaseobligationsTotalShort-term debt 1,798 – 1,798 2,262 – 2,262Long-term debt due within one year 5,708 327 6,035 4,140 310 4,450Current debt 7,506 327 7,833 6,402 310 6,712Non-current debt 26,054 3,867 29,921 26,450 4,013 30,463Total debt 33,560 4,194 37,754 32,852 4,323 37,175Cash and cash equivalents (see Note 14) 18,550 11,292Net debt 19,204 25,883CAPITAL STRUCTURE MANAGEMENTShell management’s financial strategy is to manage Shell’s assets and liabilities with the aim that, across the business cycle, “cash in” at leastequals “cash out” while maintaining a strong balance sheet.A key measure of Shell’s capital structure management is the proportion of debt to equity. Across the business cycle, management aims tomanage gearing (net debt to net debt plus total equity) within the range of 0-30%. During 2012, gearing ranged from 8.1% to 13.1%(2011: 10.8% to 17.1%) and at December 31, 2012, it was 9.2% (2011: 13.1%), calculated as follows:FINANCIAL STATEMENTS AND SUPPLEMENTS$ MILLION, EXCEPT WHERE OTHERWISE INDICATED2012 2011Net debt 19,204 25,883Total equity 189,927 171,003Total capital 209,131 196,886Gearing 9.2% 13.1%With respect to the objective of maintaining a strong balance sheet, management prioritises the application of cash to investing for organic andinorganic growth, the servicing of debt commitments, paying dividends and returning surplus cash to shareholders.

120 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 15 continued]Management’s policy is to grow the US dollar dividend through time in line with its view of Shell’s underlying earnings and cash flow.The movement in net debt was as follows:$ MILLIONCurrentdebtNon-currentdebtCash and cashequivalentsNetdebtAt January 1, 2012 (6,712) (30,463) 11,292 (25,883)Cash flow 4,480 (4,463) 7,057 7,074Other movements (5,549) 5,040 – (509)Currency translation differences (52) (35) 201 114At December 31, 2012 (7,833) (29,921) 18,550 (19,204)At January 1, 2011 (9,951) (34,381) 13,444 (30,888)Cash flow 7,157 (33) (1,803) 5,321Other movements (4,079) 3,930 – (149)Currency translation differences 161 21 (349) (167)At December 31, 2011 (6,712) (30,463) 11,292 (25,883)The following information at December 31 is also relevant to obtaining an understanding of Shell’s indebtedness:$ MILLION2012 2011Net present value of operating lease obligations [A] 29,224 18,770Under-funded retirement benefit obligation [B] 13,391 10,711Fair value hedges related to debt [C] (1,182) (983)Cash required for operational requirements 2,400 2,300[A] Total future minimum operating lease payments at December 31 discounted at 1.2% in 2012 (2011: 1.5%).[B] The excess of pension and other retirement benefit obligation over related plan assets of $8,712 million (2011: $6,325 million) and $4,679 million(2011: $4,386 million) respectively (see Note 18).[C] The fair value of hedging derivatives in designated fair value hedges, net of related accrued interest.BORROWING FACILITIESShell has access to international debt capital markets via two commercial paper (CP) programmes, a euro medium-term note (EMTN) programmeand a US universal shelf (US shelf) registration. Issuances under the CP programmes are supported by a committed credit facility and cash. Thesearrangements and undrawn facilities at December 31 are summarised as follows:$ MILLIONFacilityAmount undrawn2012 2011 2012 2011CP programmes 20,000 20,000 20,000 20,000EMTN programme 25,000 25,000 14,697 12,443US shelf registration unlimited unlimited n/a n/aCommitted credit facility 5,100 5,100 5,100 5,100Under the CP programmes, Shell can issue debt of up to $10 billion with maturities not exceeding 270 days and $10 billion with maturities notexceeding 397 days.The EMTN programme is updated annually, most recently in June 2012. No debt was issued under this programme in 2012 (2011: $nil).The US shelf registration provides Shell with the flexibility to issue debt securities, ordinary shares, preferred shares and warrants. The registrationis updated every three years and was last updated in October 2011. During 2012, debt totalling $4,250 million (2011: $nil) was issued underthe registration.The committed credit facility is available on same-day terms, at pre-agreed margins, and is due to expire in 2015. The terms and availability arenot conditional on Shell’s financial ratios or its financial credit ratings.In addition, other subsidiaries have access to short-term bank facilities totalling $3,717 million at December 31, 2012 (2011: $3,542 million).Information about liquidity risk is presented in Note 21.

eports.shell.com Shell Annual Report and Form 20-F 2012 121Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 15 continued]B – Debt (excluding finance lease obligations)In accordance with risk management policy, interest rate swaps were entered into against most of the fixed rate debt due to mature after morethan one year, affecting the effective interest rate on these balances (see Note 21).The following tables compare contractual cash flows for debt (excluding finance lease obligations) owed at December 31, with the carryingamount in the Consolidated Balance Sheet. Contractual amounts reflect the effects of changes in currency exchange rates; differences fromcarrying amounts reflect the effects of discounting, premiums and, where hedge accounting is applied, fair value adjustments. Interest is estimatedassuming interest rates applicable to variable rate debt remain constant and there is no change in aggregate principal amounts of debt other thanrepayment at scheduled maturity as reflected in the table.2012 $ MILLIONContractual payments DifferenceLess than1yearBetween1and2yearsBetween2and3yearsBetween3and4yearsBetween4and5years5yearsand later TotalfromcarryingamountCarryingamountEMTN programme 3,299 – – 1,650 1,979 3,299 10,227 845 11,072US shelf registration 2,000 2,500 3,500 – 1,750 9,500 19,250 271 19,521Bank and other borrowings 2,207 3 416 310 9 22 2,967 – 2,967Total (excluding interest) 7,506 2,503 3,916 1,960 3,738 12,821 32,444 1,116 33,560Interest 1,133 914 828 777 680 5,944 10,2762011 $ MILLIONContractual payments DifferenceLess than1yearBetween1and2yearsBetween2and3yearsBetween3and4yearsBetween4and5years5yearsand later TotalfromcarryingamountCarryingamountEMTN programme 2,262 3,231 – – 1,615 5,169 12,277 608 12,885US shelf registration 1,500 2,000 2,500 2,750 – 7,750 16,500 342 16,842Bank and other borrowings 2,640 2 1 58 387 37 3,125 – 3,125Total (excluding interest) 6,402 5,233 2,501 2,808 2,002 12,956 31,902 950 32,852Interest 1,308 1,037 866 789 729 6,009 10,738Debt is issued under the EMTN programme and US shelf registration by Shell International Finance B.V., a 100%-owned subsidiary of theCompany, and is underwritten by guarantees issued by the Company; bank and other borrowings are raised by other subsidiaries with norecourse beyond the immediate borrower and/or the local assets.The fair value of debt excluding finance lease obligations at December 31, 2012, was $36,389 million (2011: $35,511 million).C – Lease arrangementsLeasing arrangements are entered into, as lessee, for in Upstream, principally drilling and ancillary equipment and service vessels; inDownstream, principally tankers, storage capacity and retail sites; and in Corporate, principally land and buildings.The future minimum lease payments for finance and operating leases and the present value of minimum finance lease payments at December 31,by payment date are as follows:2012 $ MILLIONFinance leases Operating leasesTotal futureminimumlease payments InterestPresent valueof minimumlease paymentsTotal futureminimumlease paymentsLess than 1 year 705 378 327 4,924Between 1 and 5 years 2,372 1,223 1,149 13,8275 years and later 4,397 1,679 2,718 12,160Total 7,474 3,280 4,194 30,911FINANCIAL STATEMENTS AND SUPPLEMENTS

122 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 15 continued]2011 $ MILLIONFinance leases Operating leasesTotal futureminimumlease payments InterestPresent valueof minimumlease paymentsTotal futureminimumlease paymentsLess than 1 year 705 395 310 3,913Between 1 and 5 years 2,425 1,279 1,146 9,7695 years and later 4,653 1,786 2,867 6,230Total 7,783 3,460 4,323 19,912Finance lease obligations are secured on the leased assets.Future minimum lease payments are stated before deduction of expected rental income from non-cancellable sub-leases of $589 million(2011: $587 million) in respect of finance leases and $251 million (2011: $284 million) in respect of operating leases.Finance lease obligations include obligations under certain power generation contracts (“tolling agreements”). The present value of the futureminimum lease payments under these contracts is $2,129 million at December 31, 2012 (2011: $2,255 million). The leases mature between2021 and 2024 and the average interest rate is 8%.Operating lease expense was as follows:$ MILLION2012 2011 2010Rental expense, of which: 3,631 3,520 3,373Contingent rentals 88 91 172Sub-lease income (183) (177) (99)16 TRADE AND OTHER PAYABLES$ MILLIONDec 31, 2012 Dec 31, 2011Current Non-current Current Non-currentTrade payables 42,448 – 44,844 –Other payables 4,902 2,237 4,196 2,200Amounts due to equity-accounted investments 4,868 30 5,162 559Derivative contracts (see Note 21) 9,145 658 15,831 1,002Accruals and deferred income 11,476 1,250 11,813 1,160Total 72,839 4,175 81,846 4,921The fair value of financial liabilities included above approximates the carrying amount.Other payables principally include balances due to joint venture partners and liabilities under employee benefit plans.17 TAXATIONA – Taxation charge$ MILLION2012 2011 2010Current taxationCharge in respect of current period 22,551 22,519 16,891Adjustment in respect of prior periods 171 490 (507)Total 22,722 23,009 16,384Deferred taxationRelating to the origination and reversal of temporary differences 698 2,295 (2,030)Relating to changes in tax rates 247 (45) (60)Adjustment in respect of prior periods (218) (784) 576Total 727 1,466 (1,514)Total taxation charge 23,449 24,475 14,870

eports.shell.com Shell Annual Report and Form 20-F 2012 123Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 17 continued]The applicable tax charge at statutory tax rates reconciles to the actual taxation charge as follows:$ MILLION2012 2011 2010Income before taxation 50,289 55,660 35,344Less: Share of profit of equity-accounted investments (8,948) (8,737) (5,953)Income before taxation and share of profit of equity-accounted investments 41,341 46,923 29,391Applicable tax charge at standard statutory tax rates 23,687 25,552 16,253Adjustment in respect of prior periods (47) (294) 69Derecognition/(recognition) of tax losses 206 (450) (99)Income not subject to tax at standard statutory rates (1,369) (1,280) (1,880)Expenses not deductible for tax purposes 965 1,117 1,205Deductible items not expensed (562) (473) (641)Taxable income not recognised 259 310 198Other reconciling items, including amounts relating to changes in tax rate 310 (7) (235)Taxation charge 23,449 24,475 14,870The weighted average of statutory tax rates was 57.3% in 2012 (2011: 54.5%; 2010: 55.3%). The increase from 2011 to 2012 was principallydue to a change in the geographical mix of income in the Upstream segment, with a higher proportion of Upstream income in 2012 arising injurisdictions subject to relatively higher tax rates. The decrease from 2010 to 2011 was principally due to a lower proportion of Upstream incomearising in such jurisdictions in 2011.The taxation charge includes not only those of general application but also taxes at special rates levied on income from certain Upstreamactivities and various other taxes to which these activities are subjected.The adjustments in respect of prior periods relate to events in the current period and reflect the effects of changes in rules, facts or other factorscompared with those used in establishing the current tax position or deferred tax balance in prior periods.B – Taxes payable$ MILLIONDec 31, 2012 Dec 31, 2011Income taxes 8,663 7,151Sales taxes, excise duties and similar levies and social law taxes 4,021 3,455Total 12,684 10,606Included in other receivables at December 31, 2012 (see Note 12), is current tax receivable of $751 million (2011: $864 million).C – Deferred taxationTaking into consideration offsetting balances within the same tax jurisdiction, movements in deferred tax assets/(liabilities) were as follows:2012 $ MILLIONDecommissioningand otherprovisionsLossescarriedforwardProperty,plant andequipmentRetirementbenefits Other TotalAt January 1Deferred tax assets 4,011 1,029 (1,761) 368 1,085 4,732Deferred tax liabilities 3,333 2,219 (18,310) (1,544) (347) (14,649)7,344 3,248 (20,071) (1,176) 738 (9,917)Recognised in the periodCredited/(charged) to income 289 1,700 (2,650) 349 (415) (727)Other movements (399) (180) (790) (65) 724 (710)Currency translation differences 237 32 (401) (62) 3 (191)127 1,552 (3,841) 222 312 (1,628)At December 31Deferred tax assets 1,881 1,088 (273) 366 983 4,045Deferred tax liabilities 5,590 3,712 (23,639) (1,320) 67 (15,590)7,471 4,800 (23,912) (954) 1,050 (11,545)FINANCIAL STATEMENTS AND SUPPLEMENTS

124 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 17 continued]2011 $ MILLIONDecommissioningand otherprovisionsLossescarriedforwardProperty,plant andequipmentRetirementbenefits Other TotalAt January 1Deferred tax assets 4,311 979 (2,463) 375 2,159 5,361Deferred tax liabilities 3,517 1,657 (15,909) (1,539) (1,114) (13,388)7,828 2,636 (18,372) (1,164) 1,045 (8,027)Recognised in the period(Charged)/credited to income (400) 906 (1,854) (58) (60) (1,466)Other movements (17) (233) (39) 20 (286) (555)Currency translation differences (67) (61) 194 26 39 131(484) 612 (1,699) (12) (307) (1,890)At December 31Deferred tax assets 4,011 1,029 (1,761) 368 1,085 4,732Deferred tax liabilities 3,333 2,219 (18,310) (1,544) (347) (14,649)7,344 3,248 (20,071) (1,176) 738 (9,917)Other movements in deferred tax assets and liabilities principally relate to acquisitions, divestments, reclassifications between assets andliabilities and amounts recognised in other comprehensive income and directly in equity (see Note 23).Where the realisation of deferred tax assets is dependent on future profits, losses carried forward are recognised only to the extent that businessforecasts predict that such profits will be available. At December 31, 2012, recognised losses carried forward amounted to $27,006 million(2011: $17,933 million).Unrecognised tax losses, credits and other deductions where recovery is not expected, amounted to $17,623 million at December 31, 2012(2011: $15,376 million), including amounts of $17,455 million (2011: $15,316 million) that are subject to time limits for utilisation of five yearsor later or are not time-limited.Earnings retained by subsidiaries and equity-accounted investments amounted to $169,595 million at December 31, 2012 (2011:$147,639 million). Provision has been made for withholding and other taxes that would become payable on the distribution of these earningsonly to the extent that either Shell does not control the relevant entity or it is expected that these earnings will be remitted in the foreseeable future.18 RETIREMENT BENEFITSRetirement plans are provided for employees of major subsidiaries. The nature of such plans varies according to the legal and fiscal requirementsand economic conditions of the country in which the employees are engaged.The obligation in respect of defined benefit pension plans is based on employees’ years of service and average/final pensionable remuneration.The calculation of the obligation depends on actuarial assumptions, as described in Note 3. Defined benefit plans are typically structured asseparate legal entities managed by trustees, who hold the plan assets in trust.For defined contribution plans, pension expense is the amount of employer contributions payable for the period.Some subsidiaries have established unfunded defined benefit plans to provide certain other retirement healthcare and life insurance benefits(other benefits) to their retirees. Entitlement to these other benefits is usually based on the employee remaining in service up to retirement age andthe completion of a minimum service period.Retirement benefit expense comprised the following:$ MILLIONPension benefitsOther benefits2012 2011 2010 2012 2011 2010Service cost 1,336 1,262 1,141 113 61 62Interest cost 3,109 3,354 3,227 208 206 216Expected return on plan assets (3,704) (3,960) (3,645)Net actuarial losses recognised and other components 1,017 531 641 39 5 9Total for defined benefit plans 1,758 1,187 1,364 360 272 287Defined contribution plans 384 345 329Total 2,142 1,532 1,693 360 272 287

eports.shell.com Shell Annual Report and Form 20-F 2012 125Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 18 continued]Retirement benefit expense is presented principally within production and manufacturing expenses and selling, distribution and administrativeexpenses in the Consolidated Statement of Income.Amounts recognised in the Consolidated Balance Sheet at December 31 in respect of defined benefit plans were as follows:$ MILLIONTotal Pension benefits Other benefits2012 2011 2012 2011 2012 2011Non-current assets 12,575 11,408 12,575 11,408Non-current liabilities (6,298) (5,931) (2,401) (2,196) (3,897) (3,735)Current liabilities (402) (387) (190) (180) (212) (207)Net amount recognised 5,875 5,090 9,984 9,032 (4,109) (3,942)Pension and other benefits are derived as follows:$ MILLIONPension benefitsOther benefits2012 2011 2012 2011Defined benefit obligationAt January 1 69,962 65,848 4,386 4,067Increase in present value of the obligation for benefits based on employee service during theyear 1,336 1,262 113 61Interest on the obligation for benefits in respect of employee service in previous years 3,109 3,354 208 206Benefit payments made (3,063) (3,104) (160) (155)Actuarial losses 8,342 3,732 537 228Other movements (66) 111 (408) 2Currency translation differences 2,027 (1,241) 3 (23)At December 31 81,647 69,962 4,679 4,386Plan assetsAt January 1 63,637 63,262Expected return on plan assets 3,704 3,960Actuarial gains/(losses) 4,375 (1,888)Employer contributions 2,304 2,316Plan participants’ contributions 86 90Benefit payments made (3,063) (3,104)Other movements (91) 71Currency translation differences 1,983 (1,070)At December 31 72,935 63,637Plan assets less than defined benefit obligation at December 31 (8,712) (6,325) (4,679) (4,386)Unrecognised net actuarial losses since adoption of IFRS 18,690 15,349 541 408Unrecognised past service cost 6 8 29 36Net amount recognised 9,984 9,032 (4,109) (3,942)ADDITIONAL INFORMATIONThe composition of the defined benefit obligation and the impacts of experience adjustments in respect of the obligation and associated planassets were as follows:$ MILLION, EXCEPT WHERE OTHERWISE INDICATED2012 2011 2010 2009 2008Pension benefitsObligation for pension benefits in respect of unfunded plans 3,933 3,567 3,293 3,087 2,684Obligation for pension benefits in respect of funded plans 77,714 66,395 62,555 59,631 49,955Total defined benefit obligation 81,647 69,962 65,848 62,718 52,639Experience adjustments as a percentage of the total benefit obligation 0.0% 0.6% 0.1% (0.5)% 1.0%Plan assets 72,935 63,637 63,262 59,425 44,299Experience adjustments as a percentage of plan assets 6.0% (3.0)% 5.6% 10.5% (61.1)%Plan deficit (8,712) (6,325) (2,586) (3,293) (8,340)Actual return on plan assets 8,079 2,072 7,200 9,398 (22,087)Other benefitsTotal benefit obligation (unfunded) 4,679 4,386 4,067 3,825 3,494Experience adjustments as a percentage of the total benefit obligation 4.9% (4.7)% (3.4)% (1.9)% 0.6%FINANCIAL STATEMENTS AND SUPPLEMENTS

126 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 18 continued]Employer contributions to defined benefit pension plans in 2013 are estimated to be $2.5 billion.Weighted average plan asset allocations by asset category for the principal pension plans at December 31 were as follows:Target allocation Percentage of plan assets2012 2012 2011Equities 51% 48% 48%Debt securities 39% 40% 40%Real estate 6% 3% 3%Other 4% 9% 9%Total 100% 100% 100%Long-term investment strategies of plans are generally determined by the relevant pension fund trustees using a structured asset liability modellingapproach to define the asset mix that best meets the objectives of optimising returns within agreed risk levels while maintaining adequate fundinglevels.Assumptions and sensitivitiesThe weighted averages for the most significant assumptions applicable for the principal defined benefit pension plans were as follows:2012 2011 2010Used to determine benefit expense for yearRates of increase in pensionable remuneration 5.1% 5.5% 5.5%Discount rates 4.5% 5.1% 5.5%Expected rates of return on plan assets 6.0% 6.3% 6.6%Used to determine benefit obligation at December 31Rates of increase in pensionable remuneration 5.0% 5.1% 5.5%Discount rates 3.8% 4.5% 5.1%Expected age at death for persons aged 60Men (years) 86 86 86Women (years) 89 88 88Demographic (including mortality) assumptions are determined in the light of local conditions. Mortality assumptions are reviewed annually toreflect the latest available standard mortality tables for individual countries concerned, adjusted where appropriate to reflect experience.The long-term assumptions for pensionable remuneration increases, used to determine the benefit obligation at December 31, 2011, weredecreased by 0.4% on average compared with December 31, 2010. The decrease reflected actuarial experience combined with lower long-terminflation expectations for the UK.The assumptions for discount rates reflected decreases of AA rated corporate bond yields of 1.0% in the eurozone (2011: 0.3%), of 0.4% in theUK (2011: 0.6%) and of 0.6% in the USA (2011: 0.9%).The effect of a one percentage point increase/(decrease) at December 31, 2012, in the rate of increase in pensionable remuneration and in thediscount rates would be to increase/(decrease) the defined benefit obligation by $2,849 million/($2,479 million) and (decrease)/increase thedefined benefit obligation by ($11,275 million)/$14,456 million respectively. The effect of an increase/(decrease) of one year in lifeexpectancy at December 31, 2012, would be to increase/(decrease) the defined benefit obligation by $2,736 million/($2,771 million).The weighted averages for the most significant assumptions applicable for the principal other defined benefit plans were as follows:2012 2011 2010Discount rates (used to determine benefit obligation) 3.9% 4.6% 5.4%Healthcare cost trend rates in year after reporting year 7.1% 7.4% 7.7%Ultimate healthcare cost trend rates 4.2% 4.3% 4.3%Year ultimate healthcare cost trend rate is applicable 2028 2028 2027The effect of a one percentage point increase/(decrease) at December 31, 2012, in the rate of increase in the assumed healthcare cost trendrates would be to increase/(decrease) the defined benefit obligation by $645 million/($522 million).

eports.shell.com Shell Annual Report and Form 20-F 2012 127Consolidated Financial Statements > Notes to the Consolidated Financial Statements19 DECOMMISSIONING AND OTHER PROVISIONS$ MILLIONCurrent Non-current TotalDec 31, 2012 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011Decommissioning and restoration 1,356 894 14,715 13,072 16,071 13,966Environmental 366 357 1,032 1,078 1,398 1,435Redundancy 228 406 275 297 503 703Litigation 390 256 307 330 697 586Other 881 1,195 1,106 854 1,987 2,049Total 3,221 3,108 17,435 15,631 20,656 18,739Movementsinprovisionswereasfollows:$ MILLIONDecommissioningand restoration Environmental Redundancy Litigation Other TotalAt January 1, 2012 13,966 1,435 703 586 2,049 18,739Additional provisions 382 218 114 205 209 1,128Amounts charged against provisions (686) (269) (307) (96) (323) (1,681)Accretion expense 784 32 11 7 29 863Reclassifications and other movements 1,293 (35) (29) (5) (5) 1,219Currency translation differences 332 17 11 – 28 388At December 31, 2012 16,071 1,398 503 697 1,987 20,656At January 1, 2011 13,017 1,122 950 557 2,007 17,653Additional provisions 584 570 373 160 806 2,493Amounts charged against provisions (543) (257) (567) (155) (647) (2,169)Accretion expense 750 29 8 13 38 838Reclassifications and other movements 242 (6) (46) 17 (105) 102Currency translation differences (84) (23) (15) (6) (50) (178)At December 31, 2011 13,966 1,435 703 586 2,049 18,739The timing and amounts settled in respect of these provisions are uncertain and dependent on various factors that are not always withinmanagement’s control. Additional provisions are stated net of reversals of provisions recognised in previous periods.Of the decommissioning and restoration provision at December 31, 2012, an estimated $4,666 million is expected to be utilised within one tofive years, $3,483 million within six to ten years, and the remainder in later periods.Reviews of estimated decommissioning and restoration costs are carried out annually, which in 2012 resulted in an increase of $1,586 million(2011: $543 million) in both the provision, reported within reclassifications and other movements, and the corresponding property, plant andequipment assets reported within sales, retirements and other movements in Note 9. Offsetting this increase in 2012 was a reduction resultingfrom disposals of assets, principally in Nigeria, the USA and Canada, of $242 million (2011: the USA, Nigeria, Cameroon and Norway, of$457 million).Provisions for environmental remediation costs relate to a number of events in different locations, none of which is individually significant.The amounts charged against provisions for redundancy in 2011 principally relate to payments made to staff leaving employment as a result ofthe restructuring programme announced in 2009.Provisions for litigation costs at December 31, 2012, relate to a number of cases, none of which is individually significant. Further information ispresented in Note 25.Included in other provisions at December 31, 2012, are $863 million (2011: $790 million) relating to employee end-of-service benefits.FINANCIAL STATEMENTS AND SUPPLEMENTS

128 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements20 SHARE CAPITALISSUED AND FULLY PAIDNUMBER OF SHARESOrdinary shares of €0.07 each Sterling deferredA B shares of £1 eachAt January 1, 2012 3,668,550,437 2,661,403,172 50,000Scrip dividends 103,838,250 – –Repurchases of shares – (43,687,983) –At December 31, 2012 3,772,388,687 2,617,715,189 50,000At January 1, 2011 3,563,952,539 2,695,808,103 50,000Scrip dividends 104,597,898 – –Repurchases of shares – (34,404,931) –At December 31, 2011 3,668,550,437 2,661,403,172 50,000NOMINAL VALUE$ MILLIONOrdinary shares of €0.07 eachA B TotalAt January 1, 2012 312 224 536Scrip dividends 9 – 9Repurchases of shares – (3) (3)At December 31, 2012 321 221 542At January 1, 2011 302 227 529Scrip dividends 10 – 10Repurchases of shares – (3) (3)At December 31, 2011 312 224 536The total nominal value of sterling deferred shares is less than $1 million.At the Company’s Annual General Meeting on May 22, 2012, the Board was authorised to allot ordinary shares in the Company, and to grantrights to subscribe for or to convert any security into ordinary shares in the Company, up to an aggregate nominal amount of €147 million(representing 2,100 million ordinary shares of €0.07 each), and to list such shares or rights on any stock exchange. This authority expires at theearlier of the close of business on August 22, 2013, and the end of the Annual General Meeting to be held in 2013, unless previously renewed,revokedorvariedbytheCompanyinageneralmeeting.21 FINANCIAL INSTRUMENTS AND OTHER DERIVATIVE CONTRACTSFinancial instruments and other derivative contracts in the Consolidated Balance Sheet comprise investments in securities (see Note 11), cash andcash equivalents (see Note 14), debt (see Note 15) and certain amounts (including derivatives) reported within trade and other receivables (seeNote 12) and trade and other payables (see Note 16).A–RisksIn the normal course of business, financial instruments of various kinds are used for the purposes of managing exposure to interest rate, currencyand commodity price movements.Treasury standards are applicable to all subsidiaries, and each subsidiary is required to adopt a treasury policy consistent with these standards.These policies cover: financing structure; interest rate and foreign exchange risk management; insurance; counterparty risk management; and useof derivative instruments. Wherever possible, treasury operations are carried out through specialist regional organisations without removing fromeach subsidiary the responsibility to formulate and implement appropriate treasury policies.Apart from forward foreign exchange contracts to meet known commitments, the use of derivative financial instruments by most subsidiaries is notpermitted by their treasury policy.Other than in exceptional cases, the use of external derivative instruments is confined to specialist trading and central treasury organisations thathave appropriate skills, experience, supervision, control and reporting systems.Shell’s operations expose it to market, credit and liquidity risk, as described below.MARKET RISKMarket risk is the possibility that changes in interest rates, currency exchange rates or the prices of crude oil, natural gas, LNG, refined products,chemical feedstocks, power and environmental products will adversely affect the value of assets, liabilities or expected future cash flows.

eports.shell.com Shell Annual Report and Form 20-F 2012 129Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 21 continued]Interest rate riskMost debt is raised from central borrowing programmes. Interest rate swaps and currency swaps have been entered into to effectively convertmost centrally issued debt to floating rate linked to dollar LIBOR (London Inter-Bank Offer Rate), reflecting Shell’s policy to have debt principallydenominated in dollars and to maintain a largely floating interest rate exposure profile. Consequently, Shell is exposed predominantly to dollarLIBOR interest rate movements. The financing of most subsidiaries is also structured on a floating-rate basis and, except in special cases, furtherinterest rate risk management is discouraged.On the basis of the floating rate net debt position at December 31, 2012, and assuming other factors (principally foreign exchange rates andcommodity prices) remained constant and that no further interest rate management action were taken, an increase in interest rates of 1% woulddecrease pre-tax income by $27 million (2011: $146 million).The carrying amounts and maturities of debt and borrowing facilities are presented in Note 15. Interest expense is presented in Note 7.Foreign exchange riskMany of the markets in which Shell operates are priced, directly or indirectly, in dollars. As a result, the functional currency of most Upstreamcompanies and those with significant cross-border business is the dollar. For Downstream companies, the local currency is typically the functionalcurrency. Consequently, Shell is exposed to varying levels of foreign exchange risk when it enters into transactions that are not denominated inthe companies’ functional currencies, when foreign currency monetary assets and liabilities are translated at the reporting date and as a result ofholding net investments in operations that are not dollar-functional. The main currencies to which Shell is exposed are sterling, the Canadiandollar, euro and Australian dollar. Each company has treasury policies in place that are designed to measure and manage its foreign exchangeexposures by reference to its functional currency.Exchange rate gains and losses arise in the normal course of business from the recognition of receivables and payables and other monetary itemsin currencies other than individual companies’ functional currency. Currency exchange risk may also arise in connection with capital expenditure.For major projects, an assessment is made at the final investment decision stage whether to hedge any resulting exposure.Hedging of net investments in foreign operations or of income that arises in foreign operations that are non-dollar functional is not undertaken.Assuming other factors (principally interest rates and commodity prices) remained constant and that no further foreign exchange risk managementaction were taken, a 10% appreciation against the dollar at December 31 of the main currencies to which Shell is exposed would have thefollowing pre-tax effects:$ MILLIONIncrease/(decrease)in incomeIncreasein net assets2012 2011 2012 201110% appreciation against the dollar of:Sterling (185) (58) 1,214 1,042Canadian dollar 131 (360) 1,384 1,364Euro 30 458 1,883 1,768Australian dollar 246 153 142 120The above sensitivity information is calculated by reference to carrying amounts of assets and liabilities at December 31 only. The pre-tax effecton income arises in connection with monetary balances denominated in currencies other than the relevant entity’s functional currency; the pre-taxeffect on net assets arises principally from the translation of assets and liabilities of entities that are not dollar-functional.Foreign exchange gains and losses arising from foreign currency transactions included in income are presented in Note 6.Price riskCertain subsidiaries have a mandate to trade crude oil, natural gas, LNG, refined products, chemical feedstocks, power and environmentalproducts, and to use commodity derivatives (forwards, futures, swaps and options) as a means of managing price and timing risks arising fromthis trading. In effecting these transactions, the companies concerned operate within procedures and policies designed to ensure that risks,including those relating to the default of counterparties, are managed within authorised limits.FINANCIAL STATEMENTS AND SUPPLEMENTSRisk management systems are used for recording and valuing instruments. There is regular review of mandated trading limits by seniormanagement, daily monitoring of market risk exposure using value-at-risk (VAR) techniques (see below), daily monitoring of trading positionsagainst limits and marking-to-market of trading exposures with a department independent of traders reviewing the market values applied totrading exposures. Although trading losses can and do occur, the nature of the trading portfolio and its management are considered adequatemitigants against the risk of significant losses.

130 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 21 continued]VAR techniques based on variance/covariance or Monte Carlo simulation models are used to make a statistical assessment of the market riskarising from possible future changes in market values over a 24-hour period and within a 95% confidence level. The calculation of the range ofpotential changes in fair value takes into account positions, the history of price movements and the correlation of these price movements. Each ofthe models is regularly back-tested against actual fair value movements to ensure model integrity is maintained.VALUE-AT-RISK (PRE-TAX)$ MILLION2012 2011High Low Average Year-end High Low Average Year-endGlobal oil 28 9 17 21 39 10 19 19North America gas and power 21 4 9 8 16 3 8 12Europe gas and power 7 1 3 3 17 3 9 4CREDIT RISKPolicies are in place to ensure that wholesale sales of products are made to customers with appropriate creditworthiness. These policies includedetailed credit analysis and monitoring of trading partners and restricting large-volume trading activities to the highest-rated counterparties.Credit information is regularly shared between business and finance functions, with dedicated teams in place to quickly identify and respond tocases of credit deterioration. Mitigation measures are defined and implemented for high-risk business partners and customers, and includeshortened payment terms, collateral or other security posting and vigorous collections. In addition, policies limit the amount of credit exposure toany individual financial institution. There are no material concentrations of credit risk, with individual customers or geographically, and there hasbeen no significant level of counterparty default in recent years.Surplus cash is invested in a range of short-dated, secure and liquid instruments including short-term deposits, money market funds and similarinstruments. The portfolio of these investments is diversified to avoid concentrating risk in any one instrument, country or counterparty.Management monitors the investments regularly and adjusts the investment portfolio in light of new market information where necessary to ensurecredit risk is effectively diversified.In commodity trading, counterparty credit risk is managed within a framework of credit limits with utilisation being regularly reviewed. Creditchecks are performed by a department independent of traders, and are undertaken before contractual commitment. Where appropriate, nettingarrangements, credit insurance, prepayments and collateral are used to manage specific risks.LIQUIDITY RISKLiquidity risk is the risk that suitable sources of funding for Shell’s business activities may not be available. Management believes that it has accessto sufficient debt funding sources (capital markets), and to undrawn committed borrowing facilities to meet currently foreseeable requirements.Information about borrowing facilities is presented in Note 15.B – Derivative contractsThe carrying amounts of derivative contracts as at December 31 (see Notes 12 and 16), designated and not designated as hedging instrumentsfor hedge accounting purposes, were as follows:2012 $ MILLIONAssetsLiabilitiesDesignatedNotdesignated Total DesignatedNotdesignated Total NetInterest rate swaps 368 – 368 – – – 368Forward foreign exchange contracts 45 314 359 – 153 153 206Currency swaps 1,133 13 1,146 14 60 74 1,072Commodity derivatives – 8,746 8,746 – 8,798 8,798 (52)Other contracts – 454 454 – 778 778 (324)Total 1,546 9,527 11,073 14 9,789 9,803 1,2702011 $ MILLIONAssetsLiabilitiesDesignatedNotdesignated Total DesignatedNotdesignated Total NetInterest rate swaps 466 – 466 – – – 466Forward foreign exchange contracts 2 506 508 28 390 418 90Currency swaps 894 292 1,186 23 351 374 812Commodity derivatives – 15,626 15,626 167 14,882 15,049 577Other contracts – 223 223 – 992 992 (769)Total 1,362 16,647 18,009 218 16,615 16,833 1,176

eports.shell.com Shell Annual Report and Form 20-F 2012 131Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 21 continued]Derivative contracts are used principally as hedging instruments; however, because hedge accounting is not always applied, movements in thecarrying amounts of derivative contracts that are recognised in income are not always matched in the same period by the recognition of theincome effects of the related hedged items. Net losses before tax on derivative contracts, excluding realised commodity contracts and thoseaccounted for as hedges, were $904 million in 2012 (2011: $1,957 million; 2010: $3,213 million).Certain contracts entered into to hedge price risk relating to forecast commodity transactions and foreign exchange risk relating to forecastcapital expenditure were designated in cash flow hedging relationships. The net liability carrying amount of commodity derivative contractsdesignated as cash flow hedging instruments of $162 million at December 31, 2012, is presented after the offset of related margin balancesmaintained with exchanges. Net losses of $280 million (2011: $226 million) arising on these contracts, the majority of which mature within threeyears, were recognised in other comprehensive income in 2012; a further $5 million net losses (2011: $3 million) were recognised in income.Certain interest rate and currency swaps were designated in fair value hedges, principally in respect of debt. Information about the impact ofthese hedges is presented in Note 7 and Note 15.In the course of trading operations, certain contracts are entered into for delivery of commodities that are accounted for as derivatives. Theresulting price exposures are managed by entering into related derivative contracts. These contracts are managed on a fair value basis, and themaximum exposure to liquidity risk is the undiscounted fair value of derivative liabilities.For a minority of commodity derivatives, carrying amounts cannot be derived from quoted market prices or other observable inputs, in which casefair value is estimated using valuation techniques such as Black-Scholes, option spread models and extrapolation using quoted spreads withassumptions developed internally based on observable market activity.Other contracts include certain contracts that are held to sell or purchase commodities, and other contracts containing embedded derivatives,which are required to be recognised at fair value because of pricing or delivery conditions, even though they are only entered into to meetoperational requirements. These contracts are expected to mature between 2013 and 2025, with certain contracts having early termination rights(for either party). Valuations are derived from quoted market prices for the next six years; thereafter, from forward gas price formulae used insimilar contracts. Future gas price assumptions are the most significant input to this model, such that a decrease at December 31, 2012, of 10% inthe projected gas price would, assuming other inputs remained unchanged, increase pre-tax income by $203 million (2011: $213 million).The contractual maturities of derivative liabilities at December 31 compare with their carrying amounts in the Consolidated Balance Sheet asfollows:2012 $ MILLIONContractual maturitiesLessthan1yearBetween1and2yearsBetween2and3yearsBetween3and4yearsBetween4and5years5yearsand later Total DiscountingCarryingamountForward foreign exchangecontracts 138 11 4 1 1 – 155 (2) 153Currency swaps 50 7 – – 4 20 81 (7) 74Commodity derivatives 6,019 1,747 693 228 89 57 8,833 (35) 8,798Other contracts 163 165 158 154 152 234 1,026 (248) 778Total 6,370 1,930 855 383 246 311 10,095 (292) 9,8032011 $ MILLIONContractual maturitiesLessthan1yearBetween1and2yearsBetween2and3yearsBetween3and4yearsBetween4and5years5yearsand later Total DiscountingCarryingamountForward foreign exchangecontracts 314 118 5 – – – 437 (19) 418Currency swaps 337 14 – – 1 25 377 (3) 374Commodity derivatives 11,767 2,430 705 417 166 135 15,620 (571) 15,049Other contracts 166 194 200 203 184 410 1,357 (365) 992Total 12,584 2,756 910 620 351 570 17,791 (958) 16,833FINANCIAL STATEMENTS AND SUPPLEMENTS

132 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 21 continued]The net carrying amounts of derivative contracts held at December 31, categorised according to the predominant source and nature of inputsused in determining the fair value of each contract, were as follows:2012 $ MILLIONPrices inactive marketsfor identicalassets/liabilitiesOtherobservableinputsUnobservableinputsTotalInterest rate swaps – 368 – 368Forward foreign exchange contracts – 206 – 206Currency swaps – 1,072 – 1,072Commodity derivatives 16 (247) 179 (52)Other contracts 8 66 (398) (324)Total 24 1,465 (219) 1,2702011 $ MILLIONPrices inactive marketsfor identicalassets/liabilitiesOtherobservableinputsUnobservableinputsTotalInterest rate swaps – 466 – 466Forward foreign exchange contracts – 90 – 90Currency swaps 2 810 – 812Commodity derivatives 11 391 175 577Other contracts 14 (19) (764) (769)Total 27 1,738 (589) 1,176Movements in the net carrying amounts of derivative contracts measured using predominantly unobservable inputs were as follows:$ MILLION2012 2011At January 1 (589) (1,303)Net gains recognised in revenue 276 633Purchases 99 136Sales (157) (231)Recategorisations (net) 178 184Currency translation differences (26) (8)At December 31 (219) (589)Included in net gains recognised in revenue for 2012 are unrealised net gains totalling $482 million relating to assets and liabilities held atDecember 31, 2012 (2011: $190 million).COLLATERALThe carrying amount of financial assets pledged as collateral for liabilities or contingent liabilities at December 31, 2012, and presented withintrade and other receivables (see Note 12), was $541 million (2011: $426 million). The carrying amount of collateral held at December 31,2012, and presented within trade and other payables (see Note 16), was $353 million (2011: $607 million).22 SHARE-BASED COMPENSATION PLANS AND SHARES HELD IN TRUSTA – Share-based compensation plansShare-based compensation is paid to employees as described below. The total share-based compensation expense for the year and the fair valueof awards made during the year were as follows:$ MILLION2012 2011 2010Equity-settled plans 798 662 478Cash-settled plans 111 92 223Total share-based compensation expense 909 754 701Fair value of share-based compensation awards granted in the year 697 676 466

eports.shell.com Shell Annual Report and Form 20-F 2012 133Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 22 continued]The principal share-based employee compensation plan is the Performance Share Plan (the Plan). Other schemes offer employees opportunities toacquire shares and American Depository Shares (ADSs) of the Company or receive cash benefits measured by reference to the Company’s shareprice.Awards of shares and ADSs of the Company under the Plan are granted upon certain conditions to eligible employees who are not members ofthe Executive Committee. The actual amount of shares that may vest range from 0% to 200% of the awards, depending on the outcomes ofprescribed performance conditions over a three-year period beginning on January 1 of the award year. Shares and ADSs vest for nilconsideration.A Monte Carlo option pricing model is used to estimate the fair value of the share-based compensation expense arising from the Plan. The modelprojects and averages the results for a range of potential outcomes for the vesting conditions, the principal assumptions for which are the shareprice volatility and dividend yields for Shell and four of its main competitors over the last three years and the last 10 years.Shares granted, vested and expired or forfeited in respect of the Plan were as follows:Number ofAshares(million)Number ofBshares(million)Number ofAADSs(million)Weightedaverageremainingcontractuallife (years)At January 1, 2012 25 10 8 1.0Granted 10 3 3Vested (8) (3) (2)Expired/forfeited – – –At December 31, 2012 27 10 9 1.1At January 1, 2011 25 10 8 1.0Granted 9 3 3Vested (8) (3) (3)Expired/forfeited (1) – –At December 31, 2011 25 10 8 1.0Prior to the introduction in 2005 of the Plan, schemes were operated under which options over shares and ADSs of the Company were awardedto eligible employees, at a price not less than the fair market value of the shares and ADSs at the date the options were granted. The options havea range of expiry dates until 2016 and no additional expense to Shell arises in connection with them.Options outstanding in respect of share option plans at December 31 were as follows:Ashares Bshares AADSsNumberunder option(million)Weightedaverageexerciseprice ($)Numberunder option(million)Weightedaverageexerciseprice ($)Numberunder option(million)Weightedaverageexerciseprice ($)2012 14 24.58 4 21.94 4 46.932011 29 28.84 7 22.53 6 48.08In respect of cash-settled plans, the liability and intrinsic value of vested plans at December 31 were as follows:$ MILLION2012 2011Liability 92 279Intrinsic value of vested plans 92 279FINANCIAL STATEMENTS AND SUPPLEMENTSB – Shares held in trustShell employee share ownership trusts purchase the Company’s shares in the open market to meet future obligations arising from share-basedcompensation granted to employees. At December 31, 2012, they held 40.5 million A shares (2011: 53.5 million), 18.4 million B shares(2011: 22.0 million) and 12.7 million A ADSs (2011: 17.2 million).The total carrying amount of the Company’s shares, which are all held in connection with the share-based compensation plans, at December 31,2012, was $2,287 million (2011: $2,990 million).

134 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 22 continued]From 2010, dividends received on shares held in trust are reflected in retained earnings; the carrying amount of shares held in trust and retainedearnings at December 31, 2010, reflected the cumulative effect of this change.23 OTHER RESERVES$ MILLIONMergerSharepremiumCapitalredemptionAccumulatedotherShare plan comprehensivereserve reserve reserve reserve income TotalAt January 1, 2012 3,432 154 60 1,571 3,767 8,984Other comprehensive income attributable to Royal Dutch Shell plcshareholders – – – – 586 586Scrip dividends (9) – – – – (9)Repurchases of shares – – 3 – – 3Share-based compensation – – – 457 – 457At December 31, 2012 3,423 154 63 2,028 4,353 10,021At January 1, 2011 3,442 154 57 1,483 4,958 10,094Other comprehensive loss attributable to Royal Dutch Shell plcshareholders – – – – (1,191) (1,191)Scrip dividends (10) – – – – (10)Repurchases of shares – – 3 – – 3Share-based compensation – – – 88 – 88At December 31, 2011 3,432 154 60 1,571 3,767 8,984At January 1, 2010 3,444 154 57 1,373 4,954 9,982Other comprehensive income attributable to Royal Dutch Shell plcshareholders – – – – 4 4Scrip dividends (2) – – – – (2)Share-based compensation – – – 110 – 110At December 31, 2010 3,442 154 57 1,483 4,958 10,094The merger reserve and share premium reserve were established as a consequence of Royal Dutch Shell plc becoming the single parent companyof Royal Dutch Petroleum Company and The “Shell” Transport and Trading Company, p.l.c., now The Shell Transport and Trading CompanyLimited, in 2005.The capital redemption reserve was established in connection with repurchases of shares of Royal Dutch Shell plc.The share plan reserve is maintained in respect of equity-settled share-based compensation plans (see Note 22); related deferred taxationderecognised directly within equity was $7 million in 2012 (2011: $26 million recognised; 2010: $12 million recognised).Accumulated other comprehensive income comprises the following:2012 $ MILLIONRecognised in 2012Jan 1,2012 Pre-tax TaxAftertaxCurrency translation differencesRecognised in the period 1,622 (10) 1,612Reclassified to income 32 – 32Share ofequityaccountedinvestmentsAttributable toNoncontrollinginterestRoyal DutchShell plcshareholdersDec 31,2012Net currency translation differences 70 1,654 (10) 1,644 (136) (52) 1,456 1,526Unrealised gains/(losses) on securitiesRecognised in the period (711) (9) (720)Reclassified to income (96) 1 (95)Net unrealised gains/(losses) on securities 3,946 (807) (8) (815) (56) – (871) 3,075Cash flow hedging gains/(losses)Recognised in the period (251) 9 (242)Reclassified to income 282 (9) 273Net cash flow hedging gains/(losses) (249) 31 – 31 (30) – 1 (248)Total 3,767 878 (18) 860 (222) (52) 586 4,353

eports.shell.com Shell Annual Report and Form 20-F 2012 135Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 23 continued]2011 $ MILLIONRecognised in 2011Jan 1,2011 Pre-tax TaxAftertaxShare ofequityaccountedinvestmentsNoncontrollinginterestAttributable toRoyal DutchShell plcshareholdersDec 31,2011Currency translation differencesRecognised in the period (2,755) 14 (2,741)Reclassified to income (587) – (587)Net currency translation differences 2,732 (3,342) 14 (3,328) 48 618 (2,662) 70Unrealised gains/(losses) on securitiesRecognised in the period 1,656 3 1,659Reclassified to income 16 9 25Net unrealised gains/(losses) on securities 2,214 1,672 12 1,684 47 1 1,732 3,946Cash flow hedging gains/(losses)Recognised in the period (228) 6 (222)Reclassified to income – – –Net cash flow hedging gains/(losses) 12 (228) 6 (222) (35) (4) (261) (249)Total 4,958 (1,898) 32 (1,866) 60 615 (1,191) 3,7672010 $ MILLIONRecognised in 2010Jan 1,2010 Pre-tax TaxAftertaxShare ofequityaccountedinvestmentsNoncontrollinginterestAttributable toRoyal DutchShell plcshareholdersDec 31,2010Currency translation differencesRecognised in the period 138 (4) 134Reclassified to income (276) – (276)Net currency translation differences 2,528 (138) (4) (142) 388 (42) 204 2,732Unrealised gains/(losses) on securitiesRecognised in the period (272) (10) (282)Reclassified to income (25) 9 (16)Net unrealised gains/(losses) on securities 2,464 (297) (1) (298) 48 – (250) 2,214Cash flow hedging gains/(losses)Recognised in the period (13) (1) (14)Reclassified to income 12 – 12Net cash flow hedging gains/(losses) (38) (1) (1) (2) 52 – 50 12Total 4,954 (436) (6) (442) 488 (42) 4 4,95824 DIVIDENDS$ MILLION2012 2011 2010Interim dividends – A sharesCash: $1.71 per share (2011: $1.68; 2010: $1.68) 3,583 3,440 5,239Scrip: $1.71 per share (2011: $1.68; 2010: $0.42) 2,803 2,556 549Total – A shares 6,386 5,996 5,788Interim dividends – B sharesCash: $1.71 per share (2011: $1.68; 2010: $1.68) 3,807 3,437 4,345Scrip: $1.71 per share (2011: $1.68; 2010: $0.42) 762 1,024 63Total – B shares 4,569 4,461 4,408Total 10,955 10,457 10,196FINANCIAL STATEMENTS AND SUPPLEMENTSIn addition, on January 31, 2013, the Directors announced a further interim dividend in respect of 2012 of $0.43 per A share and $0.43 perB share. The total dividend is estimated to be $2,748 million and is payable on March 28, 2013. Under the Scrip Dividend Programme,shareholders can elect to receive dividends in the form of A shares.

136 Shell Annual Report and Form 20-F 2012 reports.shell.comConsolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 24 continued]Dividends on A shares are by default paid in euros, although holders may elect to receive dividends in sterling. Dividends on B shares are bydefault paid in sterling, although holders may elect to receive dividends in euros. Dividends on ADSs are paid in dollars.25 LEGAL PROCEEDINGS AND OTHER CONTINGENCIESGroundwater contaminationShell Oil Company (including subsidiaries and affiliates, referred to collectively as SOC), along with numerous other defendants, has been suedby public and quasi-public water purveyors, as well as governmental entities. The plaintiffs allege responsibility for groundwater contaminationcaused by releases of gasoline containing oxygenate additives. Most of these suits assert various theories of liability, including product liability,and seek to recover actual damages, including clean-up costs. Some assert claims for punitive damages. Fewer than 10 of these cases remain.On the basis of court rulings in SOC’s favour in certain cases claiming damages from threats of contamination, the claims asserted in remainingmatters, and Shell’s track record with regard to amounts paid to resolve varying claims, the management of Shell currently does not believe thatthe outcome of the remaining oxygenate-related litigation pending, as at December 31, 2012, will have a material impact on Shell.Nigerian claimsShell subsidiaries and associates operating in Nigeria are parties to various environmental and contractual disputes. These disputes are atdifferent stages in litigation, including at the appellate stage, where judgments have been rendered against Shell. If taken at face value, theaggregate amount of these judgments could be seen as material. The management of Shell, however, believes that these matters will ultimately beresolved in a manner favourable to Shell. While no assurance can be provided as to the ultimate outcome of any litigation, these matters are notexpected to have a material effect on Shell.OtherIn the ordinary course of business, Shell subsidiaries are subject to a number of other loss contingencies arising from litigation and claims broughtby governmental and private parties. The operations and earnings of Shell subsidiaries continue, from time to time, to be affected to varyingdegrees by political, legislative, fiscal and regulatory developments, including those relating to the protection of the environment and indigenousgroups, in the countries in which they operate. The industries in which Shell subsidiaries are engaged are also subject to physical risks of varioustypes. The nature and frequency of these developments and events, as well as their effect on future operations and earnings, are unpredictable.26 AUDITORS’ REMUNERATION$ MILLION2012 2011 2010Fees in respect of the audit of the Consolidated and Parent Company Financial Statements, including audit ofconsolidation returns 5 5 4Other audit fees, principally in respect of audits of accounts of subsidiaries 41 42 50Total audit fees 46 47 54Audit-related fees (for other services provided pursuant to legislation) 1 2 1Fees in respect of non-audit services (principally for tax compliance) 1 – 1Total 48 49 56In addition, PricewaterhouseCoopers provides audit services to retirement benefit plans for employees of subsidiaries. Remuneration amounted to$2 million in 2012 (2011: $2 million; 2010: $1 million).27 EARNINGS PER SHAREIncome attributabletoRoyalDutchShellplcshareholders($ million)Basic weightedaverage number ofA and B sharesDiluted weightedaverage number ofA and B shares2012 26,592 6,261,184,755 6,267,839,5452011 30,918 6,212,532,421 6,221,655,0882010 20,127 6,132,640,190 6,139,300,098Basic earnings per share are calculated by dividing the income attributable to Royal Dutch Shell plc shareholders for the year by the weightedaverage number of A and B shares outstanding during the year.

eports.shell.com Shell Annual Report and Form 20-F 2012 137Consolidated Financial Statements > Notes to the Consolidated Financial Statements[Note 27 continued]Diluted earnings per share are based on the same income figures. The weighted average number of shares outstanding during the year isadjusted for the number of shares related to share option schemes.Earnings per share are identical for A and B shares.28 POST-BALANCE SHEET EVENTSShell entered into an agreement to acquire part of Repsol S.A.’s LNG portfolio for a cash consideration of $4.4 billion. Under the terms of theagreement, which is subject to regulatory approvals and other conditions precedent, Shell will assume the finance lease obligations of thebusinesses acquired, provisionally estimated at $1.8 billion.FINANCIAL STATEMENTS AND SUPPLEMENTS

138 Shell Annual Report and Form 20-F 2012 reports.shell.comSupplementary information – oil and gas (unaudited)SUPPLEMENTARY INFORMATION –OIL AND GAS (UNAUDITED)Proved reserves and related information, and disclosures set out onpages 138-156, are referred to as “unaudited” as a means ofclarifying that this information is not covered by the audit opinion ofthe independent registered public accounting firm that has auditedand reported on the Consolidated Financial Statements.Proved oil and gas reservesProved reserves’ estimates are calculated pursuant to the U.S.Securities and Exchange Commission (SEC) Rules and the FinancialAccounting Standard Board’s Topic 932. The definitions used are inaccordance with the SEC Rule 4-10 (a) of Regulation S-X.We include proved reserves associated with future production that willbe consumed in operations.Proved reserves shown are net of any quantities of crude oil or naturalgas that are expected to be taken by others as royalties in kind but donot exclude quantities related to royalties expected to be paid in cash(except in North America and in other situations in which the royaltyquantities are owned by government or other parties) or those relatedto fixed margin contracts. Proved reserves include certain quantities ofcrude oil or natural gas that will be produced under arrangements thatinvolve Shell subsidiaries and equity-accounted investments in risksand rewards but do not transfer title of the product to those entities.Proved reserves cannot be measured exactly since estimation ofreserves involves subjective judgement (see “Risk factors” onpages 13-15). These estimates remain subject to revision and areunaudited supplementary information.Proved reserves assurance processA central group of reserves experts, who on average have around25 years’ experience in the oil and gas industry, undertake theprimary assurance of the proved reserves bookings. This group ofexperts is part of the Resources Assurance and Reporting (RAR)organisation. A Vice President with 31 years’ experience in the oil andgas industry currently heads the RAR organisation. He is a member ofthe Society of Petroleum Engineers and holds a diploma of IngénieurCivil des Ponts et Chaussées de France. The RAR organisation reportsdirectly to an Executive Vice President of Finance, who is a member ofthe Upstream Reserves Committee (URC). The URC is amultidisciplinary committee consisting of senior representatives fromthe Finance, Legal, Projects & Technology and Upstreamorganisations. The URC reviews and endorses all major (larger than20 million barrels of oil equivalent) proved reserves bookings andendorses the total aggregated proved reserves. Final approval of allproved reserves bookings remains with Shell’s Executive Committee.The Internal Audit function also provides secondary assurance throughaudits of the control framework.Additional information concerning provedreservesProved reserves can be either developed or undeveloped.Subsidiaries’ proved reserves at December 31, 2012, were dividedinto 66% developed and 34% undeveloped on a barrel of oilequivalent basis. For the Shell share of equity-accounted investments,the proved reserves were divided into 81% developed and 19%undeveloped.Proved reserves are recognised under various forms of contractualagreements. Shell’s proved reserves volumes at December 31, 2012,present in agreements such as PSCs or other forms of economicentitlement contracts, where the Shell share of reserves can vary withcommodity prices, were approximately 1,172 million barrels of crudeoil and natural gas liquids, and 12,227 thousand million scf of naturalgas.

eports.shell.com Shell Annual Report and Form 20-F 2012 139Supplementary information – oil and gas (unaudited) > Crude oil, natural gas liquids, synthetic crude oil and bitumenCRUDE OIL, NATURAL GASLIQUIDS, SYNTHETIC CRUDEOIL AND BITUMENShell subsidiaries’ estimated net proved reserves of crude oil, naturalgas liquids, synthetic crude oil and bitumen at the end of the year;their share of the net proved reserves of equity-accounted investmentsat the end of the year; and the changes in such reserves during theyear are set out below.Significant changes in crude oil, natural gas liquids, synthetic crude oiland bitumen proved developed and undeveloped reserves arediscussed below.Proved reserves 2012-2011SHELL SUBSIDIARIESEuropeThe increase of 56 million barrels in purchases of minerals in placeresulted from the acquisition of additional interests in assets in Norwayand the UK.AsiaThe net increase of 191 million barrels in revisions andreclassifications resulted from field performance studies anddevelopment activities. The reservoir performance analyses andupdates in multiple fields supported continuing better performancethan historically predicted in Iraq, Kazakhstan, Malaysia and Oman.SHELL SHARE OF EQUITY-ACCOUNTED INVESTMENTSAsiaThe net increase of 79 million barrels in revisions and reclassificationsresulted from field performance studies and development activities.The reservoir analyses and updates in fields supported continuingbetter performance than historically predicted in Brunei, Russia andthe United Arab Emirates.Proved reserves 2011-2010SHELL SUBSIDIARIESEuropeThe net increase of 140 million barrels in revisions andreclassifications resulted from field performance studies anddevelopment activities. The reservoir performance analyses andupdates in multiple fields supported continuing better productionperformance of major assets than historically predicted, primarily infields in Italy and the UK. The increase of 81 million barrels fromextensions and discoveries are associated with activities in the UK.AsiaThe net decrease of 293 million barrels in revisions andreclassifications resulted from field performance studies anddevelopment activities in producing fields in Oman and reviseddevelopment plans in Kazakhstan.OceaniaThe increase of 95 million barrels in extensions and discoveriesresulted from new bookings in Australia associated with LNGintegrated projects.AfricaThe net increase of 95 million barrels in revisions and reclassificationsresulted from field performance studies and development activities.The reservoir analyses and updates in fields supported continuingbetter performance than historically predicted in Gabon and Nigeria.AfricaThe net increase of 128 million barrels in revisions andreclassifications resulted from field performance studies anddevelopment activities. The reservoir analyses and updates in fieldssupported continuing better performance than historically predicted.USAThe net increase of 80 million barrels in revisions and reclassificationsresulted from field performance studies and development activities.CanadaThe synthetic crude oil net increase of 131 million barrels in revisionsand reclassifications resulted from field performance studies anddevelopment activities.CanadaThe increase of 116 million barrels of synthetic crude oil resulted froman extension of mining operations in Alberta.SHELL SHARE OF EQUITY-ACCOUNTED INVESTMENTSAsiaThe net increase of 83 million barrels in revisions and reclassificationsresulted from better field production performance and ongoingdevelopment activities in fields in Brunei and Russia.FINANCIAL STATEMENTS AND SUPPLEMENTS

140 Shell Annual Report and Form 20-F 2012 reports.shell.comSupplementary information – oil and gas (unaudited) > Crude oil, natural gas liquids, synthetic crude oil and bitumenCrude oil, natural gas liquids,synthetic crude oil and bitumenPROVED DEVELOPED AND UNDEVELOPED RESERVES 2012MILLION BARRELSNorth SouthEurope Asia Oceania Africa America America TotalUSACanadaOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLSyntheticcrude oil BitumenOil andNGLOil andNGLSyntheticcrude oilAllBitumen productsShell subsidiariesAt January 1 723 1,104 175 731 532 35 1,680 55 63 3,363 1,680 55 5,098Revisions and reclassifications 24 191 5 95 80 3 131 1 12 410 131 1 542Improved recovery – 6 – – 4 – – – – 10 – – 10Extensions and discoveries 44 2 – 1 30 1 – 1 7 85 – 1 86Purchases of minerals in place 56 – – – 26 – – – – 82 – – 82Sales of minerals in place – – (24) (33) (6) (1) – (1) – (64) – (1) (65)Production [A] (78) (112) (10) (106) (57) (5) (48) (7) (13) (381) (48) (7) (436)At December 31 769 1,191 146 688 609 33 1,763 49 69 3,505 1,763 49 5,317Shell share of equity-accountedinvestmentsAt January 1 31 560 34 – 306 – – – 19 950 – – 950Revisions and reclassifications (5) 79 1 – 10 – – – 2 87 – – 87Improved recovery – – – – 3 – – – – 3 – – 3Extensions and discoveries – 2 – – – – – – – 2 – – 2Purchases of minerals in place – – – – – – – – – – – – –Sales of minerals in place – – (1) – – – – – – (1) – – (1)Production (2) (126) (6) – (25) – – – (3) (162) – – (162)At December 31 24 515 28 – 294 – – – 18 879 – – 879Total 793 1,706 174 688 903 33 1,763 49 87 4,384 1,763 49 6,196Reserves attributable tonon-controlling interest in ShellsubsidiariesAt December 31 – – – 16 – – – – – 16 – – 16[A] Includes 2 million barrels consumed in operations.PROVED DEVELOPED RESERVES 2012MILLION BARRELSNorth SouthEurope Asia Oceania Africa America America TotalUSACanadaOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLSyntheticcrude oil BitumenOil andNGLOil andNGLSyntheticcrude oilAllBitumen productsShell subsidiariesAt January 1 460 781 35 438 240 22 1,249 22 35 2,011 1,249 22 3,282At December 31 425 817 34 496 283 28 1,271 18 31 2,114 1,271 18 3,403Shell share of equity-accountedinvestmentsAt January 1 30 483 21 – 202 – – – 18 754 – – 754At December 31 23 460 19 – 217 – – – 17 736 – – 736PROVED UNDEVELOPED RESERVES 2012MILLION BARRELSNorth SouthEurope Asia Oceania Africa America America TotalUSACanadaOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLSyntheticcrude oil BitumenOil andNGLOil andNGLSyntheticcrude oilAllBitumen productsShell subsidiariesAt January 1 263 323 140 293 292 13 431 33 28 1,352 431 33 1,816At December 31 344 374 112 192 326 5 492 31 38 1,391 492 31 1,914Shell share of equity-accountedinvestmentsAt January 1 1 77 13 – 104 – – – 1 196 – – 196At December 31 1 55 9 – 77 – – – 1 143 – – 143

eports.shell.com Shell Annual Report and Form 20-F 2012 141Supplementary information – oil and gas (unaudited) > Crude oil, natural gas liquids, synthetic crude oil and bitumenCrude oil, natural gas liquids,synthetic crude oil and bitumenPROVED DEVELOPED AND UNDEVELOPED RESERVES 2011MILLION BARRELSNorth SouthEurope Asia Oceania Africa America America TotalUSACanadaOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLSyntheticcrude oil BitumenOil andNGLOil andNGLSyntheticcrude oilAllBitumen productsShell subsidiariesAt January 1 587 1,493 74 750 556 35 1,567 51 66 3,561 1,567 51 5,179Revisions and reclassifications 140 (293) 17 128 28 3 42 9 10 33 42 9 84Improved recovery – 1 – – – – – – 1 2 – – 2Extensions and discoveries 81 6 95 1 5 4 116 – 3 195 116 – 311Purchases of minerals in place – – – – – – – – – – – – –Sales of minerals in place – – – (29) (5) – – – – (34) – – (34)Production [A] (85) (103) (11) (119) (52) (7) (45) (5) (17) (394) (45) (5) (444)At December 31 723 1,104 175 731 532 35 1,680 55 63 3,363 1,680 55 5,098Shell share of equity-accountedinvestmentsAt January 1 30 592 35 – 287 – – – 23 967 – – 967Revisions and reclassifications 3 83 6 – 15 – – – (1) 106 – – 106Improved recovery – 1 – – 31 – – – – 32 – – 32Extensions and discoveries – 14 1 – – – – – – 15 – – 15Purchases of minerals in place – – – – – – – – – – – – –Sales of minerals in place – – (1) – (2) – – – – (3) – – (3)Production (2) (130) (7) – (25) – – – (3) (167) – – (167)At December 31 31 560 34 – 306 – – – 19 950 – – 950Total 754 1,664 209 731 838 35 1,680 55 82 4,313 1,680 55 6,048Reserves attributable tonon-controlling interest in ShellsubsidiariesAt December 31 – – – 13 – – – – – 13 – – 13[A] Includes 3 million barrels consumed in operations.PROVED DEVELOPED RESERVES 2011MILLION BARRELSNorth SouthEurope Asia Oceania Africa America America TotalUSACanadaOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLSyntheticcrude oil BitumenOil andNGLOil andNGLSyntheticcrude oilAllBitumen productsShell subsidiariesAt January 1 496 382 36 406 262 26 1,214 23 38 1,646 1,214 23 2,883At December 31 460 781 35 438 240 22 1,249 22 35 2,011 1,249 22 3,282Shell share of equity-accountedinvestmentsAt January 1 22 402 22 – 205 – – – 21 672 – – 672At December 31 30 483 21 – 202 – – – 18 754 – – 754PROVED UNDEVELOPED RESERVES 2011MILLION BARRELSNorth SouthEurope Asia Oceania Africa America America TotalUSACanadaOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLSyntheticcrude oil BitumenOil andNGLOil andNGLSyntheticcrude oilAllBitumen productsShell subsidiariesAt January 1 91 1,111 38 344 294 9 353 28 28 1,915 353 28 2,296At December 31 263 323 140 293 292 13 431 33 28 1,352 431 33 1,816Shell share of equity-accountedinvestmentsAt January 1 8 190 13 – 82 – – – 2 295 – – 295At December 31 1 77 13 – 104 – – – 1 196 – – 196FINANCIAL STATEMENTS AND SUPPLEMENTS

142 Shell Annual Report and Form 20-F 2012 reports.shell.comSupplementary information – oil and gas (unaudited) > Crude oil, natural gas liquids, synthetic crude oil and bitumenCrude oil, natural gas liquids,synthetic crude oil and bitumenPROVED DEVELOPED AND UNDEVELOPED RESERVES 2010MILLION BARRELSNorth SouthEurope Asia Oceania Africa America America TotalUSACanadaOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLSyntheticcrude oil BitumenOil andNGLOil andNGLSyntheticcrude oilAllBitumen productsShell subsidiariesAt January 1 496 1,231 77 735 422 38 1,599 57 38 3,037 1,599 57 4,693Revisions and reclassifications 205 313 7 138 47 2 (4) (2) 17 729 (4) (2) 723Improved recovery – 8 – – 54 – – – – 62 – – 62Extensions and discoveries – 7 1 7 96 2 – 3 31 144 – 3 147Purchases of minerals in place 11 33 – 14 1 – – – – 59 – – 59Sales of minerals in place (23) – – (14) (5) – – – – (42) – – (42)Production [A] (102) (99) (11) (130) (59) (7) (28) (7) (20) (428) (28) (7) (463)At December 31 587 1,493 74 750 556 35 1,567 51 66 3,561 1,567 51 5,179Shell share of equity-accountedinvestmentsAt January 1 30 599 58 – 288 – – – 19 994 – – 994Revisions and reclassifications 2 101 2 – 22 – – – 6 133 – – 133Improved recovery – 4 – – – – – – – 4 – – 4Extensions and discoveries – 9 – – 4 – – – 1 14 – – 14Purchases of minerals in place – – – – – – – – – – – – –Sales of minerals in place – – (15) – – – – – – (15) – – (15)Production (2) (121) (10) – (27) – – – (3) (163) – – (163)At December 31 30 592 35 – 287 – – – 23 967 – – 967Total 617 2,085 109 750 843 35 1,567 51 89 4,528 1,567 51 6,146Reserves attributable tonon-controlling interest in ShellsubsidiariesAt December 31 – 5 – 13 – – – – – 18 – – 18[A] Includes 2 million barrels consumed in operations.PROVED DEVELOPED RESERVES 2010MILLION BARRELSNorth SouthEurope Asia Oceania Africa America America TotalUSACanadaOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLSyntheticcrude oil BitumenOil andNGLOil andNGLSyntheticcrude oilAllBitumen productsShell subsidiariesAt January 1 384 341 40 379 249 23 691 29 35 1,451 691 29 2,171At December 31 496 382 36 406 262 26 1,214 23 38 1,646 1,214 23 2,883Shell share of equity-accountedinvestmentsAt January 1 9 420 39 – 216 – – – 17 701 – – 701At December 31 22 402 22 – 205 – – – 21 672 – – 672PROVED UNDEVELOPED RESERVES 2010MILLION BARRELSNorth SouthEurope Asia Oceania Africa America America TotalUSACanadaOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLOil andNGLSyntheticcrude oil BitumenOil andNGLOil andNGLSyntheticcrude oilAllBitumen productsShell subsidiariesAt January 1 112 890 37 356 173 15 908 28 3 1,586 908 28 2,522At December 31 91 1,111 38 344 294 9 353 28 28 1,915 353 28 2,296Shell share of equity-accountedinvestmentsAt January 1 21 179 19 – 72 – – – 2 293 – – 293At December 31 8 190 13 – 82 – – – 2 295 – – 295

eports.shell.com Shell Annual Report and Form 20-F 2012 143Supplementary information – oil and gas (unaudited) > Natural gasNATURAL GASShell subsidiaries’ estimated net proved reserves of natural gas at theendoftheyear;theirshareofthenetprovedreservesofequityaccountedinvestments at the end of the year; and the changes in suchreserves during the year are set out below. The volumes in the tablebelow have not been adjusted to standard heat content. Apart fromintegrated projects, volumes of gas are reported on an “as-sold” basis.The price used to calculate future revenue and cash flows from provedgasreservesisthecontractpriceorthe12-monthaverageon“as-sold”volumes. Volumes associated with integrated projects are thosemeasured at a designated transfer point between the Upstream andDownstream portions of the integrated project. Natural gas volumesare converted to oil equivalent using a factor of 5,800 scf per barrel.Significant changes in natural gas proved developed andundeveloped reserves are discussed below.Proved reserves 2012-2011SHELL SUBSIDIARIESProved reserves 2011-2010SHELL SUBSIDIARIESEuropeThe net increase of 990 thousand million scf in revisions andreclassifications resulted from better production performance anddevelopment activities resulting in extending the end-of-field lifeprimarily in Denmark and Norway, and from development activities inIreland and development activities and better production performancein the UK.AsiaThe net decrease of 860 thousand million scf in revisions andreclassifications primarily resulted from a decrease in entitlementshare due to higher commodity prices. The increase of 239 thousandmillion scf in extensions and discoveries resulted from new bookingsand extensions of proved areas by drilling activities.OceaniaThe increase of 1,471 thousand million scf from extensions anddiscoveries was associated with LNG integrated projects in Australia.OceaniaThe decrease of 303 thousand million scf in sales in place resultedfrom the sale of part of our interest in the Prelude LNG integratedproject in Australia.USAThe net decrease of 1,076 thousand million scf in revisions andreclassifications related to reductions from lower commodity prices,partly offset by increases from field performance studies anddevelopment activities. The increase of 393 thousand million scf inextensions and discoveries resulted from new bookings and extensionsof proved areas by drilling activities.CanadaThe net decrease of 683 thousand million scf in revisions andreclassifications resulted from lower commodity prices.SHELL SHARE OF EQUITY-ACCOUNTED INVESTMENTSAsiaThe net increase of 284 thousand million scf in revisions andreclassifications resulted from field performance studies anddevelopment activities. The reservoir performance analyses andupdates in multiple fields supported continuing better productionperformance in Brunei and Russia.USAThe net increase of 405 thousand million scf in revisions andreclassifications related to drilling activities and studies. The increaseof 694 thousand million scf in extensions and discoveries resulted fromnew bookings and extensions of proved areas by drilling activities.The decrease of 213 thousand million scf resulted from asset sales.CanadaThe increase of 816 thousand million scf in extensions and discoveriesrelated to development drilling which resulted in additional provedareas.SHELL SHARE OF EQUITY-ACCOUNTED INVESTMENTSAsiaThe net increase of 310 thousand million scf in revisions andreclassifications resulted primarily from studies.FINANCIAL STATEMENTS AND SUPPLEMENTS

144 Shell Annual Report and Form 20-F 2012 reports.shell.comSupplementary information – oil and gas (unaudited) > Natural gasNatural gasPROVED DEVELOPED AND UNDEVELOPED RESERVES 2012THOUSAND MILLION STANDARD CUBIC FEETNorth America SouthEurope Asia Oceania Africa USA Canada America TotalShell subsidiariesAt January 1 5,498 10,691 5,952 2,800 3,196 2,045 104 30,286Revisions and reclassifications 14 160 136 (142) (1,076) (683) 8 (1,583)Improved recovery – – – – 16 – – 16Extensions and discoveries 68 – – 89 393 84 4 638Purchases of minerals in place 22 – – – 139 – – 161Sales of minerals in place – – (303) (163) (6) (191) – (663)Production [A] (581) (631) (214) (343) (397) (244) (21) (2,431)At December 31 5,021 10,220 5,571 2,241 2,265 1,011 95 26,424Shell share of equity-accounted investmentsAt January 1 9,903 6,262 1,142 – 63 – 6 17,376Revisions and reclassifications (89) 284 15 – 31 – (1) 240Improved recovery – – – – – – – –Extensions and discoveries 3 26 – – – – – 29Purchases of minerals in place – – – – – – – –Sales of minerals in place – – (21) – – – – (21)Production [B] (670) (481) (97) – (7) – (1) (1,256)At December 31 9,147 6,091 1,039 – 87 – 4 16,368Total 14,168 16,311 6,610 2,241 2,352 1,011 99 42,792Reserves attributable to non-controlling interest in ShellsubsidiariesAt December 31 – 6 – 7 – – – 13[A] Includes 161 thousand million standard cubic feet consumed in operations.[B] Includes 60 thousand million standard cubic feet consumed in operations.PROVED DEVELOPED RESERVES 2012THOUSAND MILLION STANDARD CUBIC FEETNorth America SouthEurope Asia Oceania Africa USA Canada America TotalShell subsidiariesAt January 1 4,685 9,379 839 1,112 1,506 951 92 18,564At December 31 4,192 9,366 843 1,012 1,607 872 81 17,973Shell share of equity-accounted investmentsAt January 1 7,837 4,936 241 – 46 – 5 13,065At December 31 7,407 5,088 581 – 67 – 3 13,146PROVED UNDEVELOPED RESERVES 2012THOUSAND MILLION STANDARD CUBIC FEETNorth America SouthEurope Asia Oceania Africa USA Canada America TotalShell subsidiariesAt January 1 813 1,312 5,113 1,688 1,690 1,094 12 11,722At December 31 829 854 4,728 1,229 658 139 14 8,451Shell share of equity-accounted investmentsAt January 1 2,066 1,326 901 – 17 – 1 4,311At December 31 1,740 1,003 458 – 20 – 1 3,222

eports.shell.com Shell Annual Report and Form 20-F 2012 145Supplementary information – oil and gas (unaudited) > Natural gasNatural gasPROVED DEVELOPED AND UNDEVELOPED RESERVES 2011THOUSAND MILLION STANDARD CUBIC FEETNorth America SouthEurope Asia Oceania Africa USA Canada America TotalShell subsidiariesAt January 1 5,082 11,970 4,814 2,989 2,671 1,308 149 28,983Revisions and reclassifications 990 (860) (118) 90 405 155 (23) 639Improved recovery – – – – – – – –Extensions and discoveries 31 239 1,471 71 694 816 – 3,322Purchases of minerals in place – – – – – – – –Sales of minerals in place – (120) – (21) (213) (5) – (359)Production [A] (605) (538) (215) (329) (361) (229) (22) (2,299)At December 31 5,498 10,691 5,952 2,800 3,196 2,045 104 30,286Shell share of equity-accounted investmentsAt January 1 10,484 6,248 1,335 – 74 – 11 18,152Revisions and reclassifications 72 310 (112) – (6) – (4) 260Improved recovery – – – – 3 – – 3Extensions and discoveries – 168 14 – – – – 182Purchases of minerals in place – – – – – – – –Sales of minerals in place (4) – (30) – (1) – – (35)Production [B] (649) (464) (65) – (7) – (1) (1,186)At December 31 9,903 6,262 1,142 – 63 – 6 17,376Total 15,401 16,953 7,094 2,800 3,259 2,045 110 47,662Reserves attributable to non-controlling interest in ShellsubsidiariesAt December 31 – 10 – 9 – – – 19[A] Includes 149 thousand million standard cubic feet consumed in operations.[B] Includes 57 thousand million standard cubic feet consumed in operations.PROVED DEVELOPED RESERVES 2011THOUSAND MILLION STANDARD CUBIC FEETNorth America SouthEurope Asia Oceania Africa USA Canada America TotalShell subsidiariesAt January 1 4,358 2,273 1,041 1,092 1,460 869 89 11,182At December 31 4,685 9,379 839 1,112 1,506 951 92 18,564Shell share of equity-accounted investmentsAt January 1 8,154 2,510 311 – 55 – 9 11,039At December 31 7,837 4,936 241 – 46 – 5 13,065PROVED UNDEVELOPED RESERVES 2011THOUSAND MILLION STANDARD CUBIC FEETNorth America SouthEurope Asia Oceania Africa USA Canada America TotalShell subsidiariesAt January 1 724 9,697 3,773 1,897 1,211 439 60 17,801At December 31 813 1,312 5,113 1,688 1,690 1,094 12 11,722Shell share of equity-accounted investmentsAt January 1 2,330 3,738 1,024 – 19 – 2 7,113At December 31 2,066 1,326 901 – 17 – 1 4,311FINANCIAL STATEMENTS AND SUPPLEMENTS

146 Shell Annual Report and Form 20-F 2012 reports.shell.comSupplementary information – oil and gas (unaudited) > Natural gasNatural gasPROVED DEVELOPED AND UNDEVELOPED RESERVES 2010THOUSAND MILLION STANDARD CUBIC FEETNorth America SouthEurope Asia Oceania Africa USA Canada America TotalShell subsidiariesAt January 1 4,722 13,733 4,800 3,038 2,258 1,172 238 29,961Revisions and reclassifications 1,077 (1,379) 262 118 292 36 (75) 331Improved recovery – – – – 41 – – 41Extensions and discoveries – 122 9 194 432 334 13 1,104Purchases of minerals in place 2 9 – 5 173 – – 189Sales of minerals in place (20) – (20) (80) (94) (11) (2) (227)Production [A] (699) (515) (237) (286) (431) (223) (25) (2,416)At December 31 5,082 11,970 4,814 2,989 2,671 1,308 149 28,983Shell share of equity-accounted investmentsAt January 1 11,113 6,079 1,832 – 65 – 5 19,094Revisions and reclassifications 103 321 52 – 16 – 6 498Improved recovery – 1 – – – – – 1Extensions and discoveries – 184 – – – – – 184Purchases of minerals in place – – 48 – – – – 48Sales of minerals in place – – (516) – – – – (516)Production [B] (732) (337) (81) – (7) – – (1,157)At December 31 10,484 6,248 1,335 – 74 – 11 18,152Total 15,566 18,218 6,149 2,989 2,745 1,308 160 47,135Reserves attributable to non-controlling interest in ShellsubsidiariesAt December 31 – 24 – 8 – – – 32[A] Includes 138 thousand million standard cubic feet consumed in operations.[B] Includes 40 thousand million standard cubic feet consumed in operations.PROVED DEVELOPED RESERVES 2010THOUSAND MILLION STANDARD CUBIC FEETNorth America SouthEurope Asia Oceania Africa USA Canada America TotalShell subsidiariesAt January 1 3,574 2,418 1,046 957 1,248 754 173 10,170At December 31 4,358 2,273 1,041 1,092 1,460 869 89 11,182Shell share of equity-accounted investmentsAt January 1 8,732 1,973 354 – 56 – 5 11,120At December 31 8,154 2,510 311 – 55 – 9 11,039PROVED UNDEVELOPED RESERVES 2010THOUSAND MILLION STANDARD CUBIC FEETNorth America SouthEurope Asia Oceania Africa USA Canada America TotalShell subsidiariesAt January 1 1,148 11,315 3,754 2,081 1,010 418 65 19,791At December 31 724 9,697 3,773 1,897 1,211 439 60 17,801Shell share of equity-accounted investmentsAt January 1 2,381 4,106 1,478 – 9 – – 7,974At December 31 2,330 3,738 1,024 – 19 – 2 7,113

eports.shell.com Shell Annual Report and Form 20-F 2012 147Supplementary information – oil and gas (unaudited) > Standardised measure of discounted future cash flowsSTANDARDISED MEASUREOF DISCOUNTED FUTURECASH FLOWSSEC Form 20-F requires the disclosure of a standardised measure ofdiscounted future cash flows, relating to proved reserves’ quantitiesandbasedona12-monthunweightedarithmeticaveragesalesprice,calculated on a first-day-of-the-month basis, with cost factors based onthose at the end of each year, currently enacted tax rates and a 10%annual discount factor. The information so calculated does not providea reliable measure of future cash flows from proved reserves, nor doesit permit a realistic comparison to be made of one entity with anotherbecause the assumptions used cannot reflect the varying circumstanceswithin each entity.In addition, a substantial but unknown proportion of future real cashflows from oil and gas production activities is expected to derive fromreserves which have already been discovered, but which cannot yetbe regarded as proved.2012 – SHELL SUBSIDIARIES $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Canada America TotalFuture cash inflows 129,581 154,672 65,144 82,382 65,975 150,393 6,942 655,089Future production costs 40,891 30,819 14,800 20,830 36,543 81,516 3,459 228,858Future development costs 18,717 13,151 21,943 7,350 15,708 17,573 1,836 96,278Future tax expenses 43,997 47,301 7,436 33,954 4,832 13,298 721 151,539Future net cash flows 25,976 63,401 20,965 20,248 8,892 38,006 926 178,414Effect of discounting cash flows at 10% 10,620 28,859 16,586 5,833 3,909 27,331 198 93,336Standardised measure of discounted future netcash flows 15,356 34,542 4,379 14,415 4,983 10,675 728 85,078Non-controlling interest included – 8 – 281 – – – 2892012 – SHELL SHARE OF EQUITY-ACCOUNTED INVESTMENTS $ MILLIONNorth America SouthEurope Asia Oceania[A] Africa USA Canada America TotalFuture cash inflows 82,091 102,607 15,814 – 31,479 – 1,867 233,858Future production costs 57,542 47,685 3,710 – 9,434 – 827 119,198Future development costs 1,817 7,082 4,188 – 4,087 – 71 17,245Future tax expenses 8,894 19,740 2,399 – 6,846 – 520 38,399Future net cash flows 13,838 28,100 5,517 – 11,112 – 449 59,016Effect of discounting cash flows at 10% 6,277 11,737 2,169 – 4,854 – 133 25,170Standardised measure of discounted future netcash flows 7,561 16,363 3,348 – 6,258 – 316 33,846[A] Includes Shell’s ownership of 23% of Woodside Petroleum Ltd as from April 2012 (previously: 24%), a publicly listed company on the Australian SecuritiesExchange. We have limited access to data; accordingly, the numbers are estimated.2011 – SHELL SUBSIDIARIES $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Canada America TotalFuture cash inflows 134,985 131,083 66,460 88,833 68,992 161,029 6,291 657,673Future production costs 39,102 26,746 15,029 25,795 37,258 69,986 2,904 216,820Future development costs 15,548 13,280 23,692 7,325 15,004 20,935 1,370 97,154Future tax expenses 51,533 41,412 8,257 32,812 6,066 18,028 762 158,870Future net cash flows 28,802 49,645 19,482 22,901 10,664 52,080 1,255 184,829Effect of discounting cash flows at 10% 12,002 22,306 17,510 7,454 3,934 35,312 293 98,811Standardised measure of discounted future netcash flows 16,800 27,339 1,972 15,447 6,730 16,768 962 86,018Non-controlling interest included – 12 – 269 – – – 281FINANCIAL STATEMENTS AND SUPPLEMENTS

148 Shell Annual Report and Form 20-F 2012 reports.shell.comSupplementary information – oil and gas (unaudited) > Standardised measure of discounted future cash flows2011 – SHELL SHARE OF EQUITY-ACCOUNTED INVESTMENTS $ MILLIONNorth America SouthEurope Asia Oceania[A] Africa USA Canada America TotalFuture cash inflows 85,799 103,430 17,173 – 33,018 – 1,909 241,329Future production costs 58,419 48,613 5,089 – 11,512 – 826 124,459Future development costs 2,290 6,651 4,167 – 3,361 – 211 16,680Future tax expenses 9,753 20,679 2,315 – 6,350 – 541 39,638Future net cash flows 15,337 27,487 5,602 – 11,795 – 331 60,552Effect of discounting cash flows at 10% 6,758 11,056 2,301 – 5,151 – 120 25,386Standardised measure of discounted future netcash flows 8,579 16,431 3,301 – 6,644 – 211 35,166[A] Includes Shell’s ownership of 24% of Woodside Petroleum Ltd, a publicly listed company on the Australian Securities Exchange. We have limited access todata; accordingly, the numbers are estimated.2010 – SHELL SUBSIDIARIES $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Canada America TotalFuture cash inflows 82,004 125,394 35,794 65,203 53,573 114,649 4,873 481,490Future production costs 28,812 24,155 8,797 22,453 25,277 67,835 2,507 179,836Future development costs 11,719 17,432 11,946 7,770 11,753 18,988 1,330 80,938Future tax expenses 25,739 34,635 5,090 21,854 5,852 7,521 572 101,263Future net cash flows 15,734 49,172 9,961 13,126 10,691 20,305 464 119,453Effect of discounting cash flows at 10% 4,150 29,399 8,498 4,111 3,835 13,524 82 63,599Standardised measure of discounted future netcash flows 11,584 19,773 1,463 9,015 6,856 6,781 382 55,854Non-controlling interest included – 126 – 166 – – – 2922010 – SHELL SHARE OF EQUITY-ACCOUNTED INVESTMENTS $ MILLIONNorth America SouthEurope Asia Oceania[A] Africa USA Canada America TotalFuture cash inflows 71,140 69,452 12,179 – 21,994 – 1,667 176,432Future production costs 50,406 30,703 3,083 – 8,099 – 493 92,784Future development costs 2,265 5,116 1,410 – 2,944 – 118 11,853Future tax expenses 6,881 14,750 1,751 – 3,921 – 531 27,834Future net cash flows 11,588 18,883 5,935 – 7,030 – 525 43,961Effect of discounting cash flows at 10% 5,159 7,024 2,423 – 2,928 – 165 17,699Standardised measure of discounted future netcash flows 6,429 11,859 3,512 – 4,102 – 360 26,262[A] Includes Shell’s ownership of 24% of Woodside Petroleum Ltd as from November 2010 (previously: 34%), a publicly listed company on the AustralianSecurities Exchange. We have limited access to data; accordingly, the numbers are estimated.

eports.shell.com Shell Annual Report and Form 20-F 2012 149Supplementary information – oil and gas (unaudited) > Standardised measure of discounted future cash flowsChange in standardised measure of discountedfuture net cash flows relating to provedreserves2012 $ MILLIONShell shareof equityaccountedShellsubsidiaries investmentsTotalAt January 1 86,018 35,166 121,184Net changes in prices and production costs (4,631) 6,166 1,535Revisions of previous reserves estimates 16,755 2,696 19,451Extensions, discoveries and improved recovery 3,859 299 4,158Purchases and sales of minerals in place (1,821) (91) (1,912)Development cost related to future production (12,179) (2,971) (15,150)Sales and transfers of oil and gas, net of production costs (43,000) (16,139) (59,139)Development cost incurred during the year 19,559 2,288 21,847Accretion of discount 16,570 5,130 21,700Net change in income tax 3,948 1,302 5,250At December 31 85,078 33,846 118,9242011 $ MILLIONShell shareof equityaccountedShellsubsidiaries investmentsTotalAt January 1 55,854 26,262 82,116Net changes in prices and production costs 80,192 23,636 103,828Revisions of previous reserves estimates 15,144 3,205 18,349Extensions, discoveries and improved recovery 14,508 1,725 16,233Purchases and sales of minerals in place (1,957) (288) (2,245)Development cost related to future production (21,733) (4,173) (25,906)Sales and transfers of oil and gas, net of production costs (47,669) (15,296) (62,965)Development cost incurred during the year 13,529 2,607 16,136Accretion of discount 10,572 3,727 14,299Net change in income tax (32,422) (6,239) (38,661)At December 31 86,018 35,166 121,1842010 $ MILLIONShell shareof equityaccountedShellsubsidiaries investmentsTotalAt January 1 33,395 22,346 55,741Net changes in prices and production costs 49,223 10,585 59,808Revisions of previous reserves estimates 23,288 3,732 27,020Extensions, discoveries and improved recovery 5,486 785 6,271Purchases and sales of minerals in place 317 (2,070) (1,753)Development cost related to future production (12,355) (698) (13,053)Sales and transfers of oil and gas, net of production costs (36,841) (11,432) (48,273)Development cost incurred during the year 13,454 2,380 15,834Accretion of discount 5,928 3,393 9,321Net change in income tax (26,041) (2,759) (28,800)At December 31 55,854 26,262 82,116FINANCIAL STATEMENTS AND SUPPLEMENTS

150 Shell Annual Report and Form 20-F 2012 reports.shell.comSupplementary information – oil and gas (unaudited) > Oil and gas exploration and production activities capitalised costsOIL AND GAS EXPLORATIONAND PRODUCTION ACTIVITIESCAPITALISED COSTSThe aggregate amount of property, plant and equipment and intangibleassets relating to oil and gas exploration and production activities andthe aggregate amount of the related depreciation, depletion andamortisation at December 31 are shown in the tables below.Shell subsidiaries$ MILLION2012 2011CostProved properties [A] 191,053 167,690Unproved properties 33,061 28,474Support equipment and facilities 6,637 6,313230,751 202,477Depreciation, depletion and amortisationProved properties [A] 101,709 92,562Unproved properties 2,110 2,351Support equipment and facilities 3,549 3,515107,368 98,428Net capitalised costs 123,383 104,049[A] Includes capitalised asset decommissioning and restoration costs and related depreciation.Shell share of equity-accounted investments$ MILLION2012 2011CostProved properties [A] 50,227 45,389Unproved properties 3,584 2,563Support equipment and facilities 3,480 3,24957,291 51,201Depreciation, depletion and amortisationProved properties [A] 25,968 23,669Unproved properties 180 155Support equipment and facilities 1,893 1,79828,041 25,622Net capitalised costs 29,250 25,579[A] Includes capitalised asset decommissioning and restoration costs and related depreciation.

eports.shell.com Shell Annual Report and Form 20-F 2012 151Supplementary information – oil and gas (unaudited) > Oil and gas exploration and production activities costs incurredOIL AND GAS EXPLORATIONAND PRODUCTION ACTIVITIESCOSTS INCURREDCosts incurred during the year in oil and gas property acquisition,exploration and development activities, whether capitalised or chargedto income currently, are shown in the table below. Development costsinclude capitalised asset decommissioning and restoration costs andexclude costs of acquiring support equipment and facilities, but includedepreciation thereon.Shell subsidiaries2012 $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Other[A] America TotalAcquisition of propertiesProved 387 – – – 567 1 – 955Unproved 16 148 1,769 96 2,610 381 152 5,172Exploration 421 867 352 559 4,898 1,109 479 8,685Development 3,080 2,773 4,901 1,733 3,621 2,113 354 18,575[A] Comprises Canada and Greenland.2011 $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Other[A] America TotalAcquisition of propertiesProved 32 1 – 1 – 1 – 35Unproved 1 1,181 73 174 1,417 763 23 3,632Exploration 321 510 300 404 3,138 663 386 5,722Development 1,152 3,089 1,196 1,047 2,697 1,614 340 11,135[A] Comprises Canada and Greenland.2010 $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Other[A] America TotalAcquisition of propertiesProved 302 4 – 313 38 – – 657Unproved 304 110 – 330 5,776 86 – 6,606Exploration 380 414 410 508 1,939 443 277 4,371Development 2,590 2,800 437 1,569 2,072 3,239 307 13,014[A] Comprises Canada and Greenland.FINANCIAL STATEMENTS AND SUPPLEMENTS

152 Shell Annual Report and Form 20-F 2012 reports.shell.comSupplementary information – oil and gas (unaudited) > Oil and gas exploration and production activities costs incurredShell share of equity-accounted investments2012 $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Other America TotalAcquisition of propertiesProved – – – – – – – –Unproved – – – – – – – –Exploration 38 323 103 – 10 – – 474Development 209 2,217 549 – 405 – 34 3,4142011 $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Other America TotalAcquisition of propertiesProved – – – – – – – –Unproved – – 279 – – – – 279Exploration 26 250 160 – 9 – – 445Development 280 2,103 1,023 – 349 – 81 3,8362010 $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Other America TotalAcquisition of propertiesProved – – – – – – – –Unproved – – – – – – – –Exploration 59 276 127 – 4 – – 466Development 306 2,083 849 – 302 – 50 3,590

eports.shell.com Shell Annual Report and Form 20-F 2012 153Supplementary information – oil and gas (unaudited) > Oil and gas exploration and production activities earningsOIL AND GAS EXPLORATION ANDPRODUCTION ACTIVITIES EARNINGSShell subsidiaries2012 $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Other[A] America TotalRevenueThird parties 4,705 3,981 1,941 2,807 3,573 207 23 17,237Sales between businesses 10,275 16,450 1,129 10,364 3,906 6,443 1,431 49,998Total 14,980 20,431 3,070 13,171 7,479 6,650 1,454 67,235Production costs excluding taxes 2,516 1,582 395 1,540 2,486 2,986 255 11,760Taxes other than income tax [B] 350 410 322 1,248 39 – 145 2,514Exploration 347 461 175 699 801 423 198 3,104Depreciation, depletion and amortisation 1,531 1,222 304 1,261 3,837 2,037 315 10,507Other (costs)/income (1,331) (3,157) 1,769 322 (563) (2,175) (63) (5,198)Earnings before taxation 8,905 13,599 3,643 8,745 (247) (971) 478 34,152Taxation charge/(credit) 6,327 10,742 1,104 5,358 (127) (428) 137 23,113Earnings after taxation 2,578 2,857 2,539 3,387 (120) (543) 341 11,039[A] Comprises Canada and Greenland.[B] Includes cash paid royalties to governments outside North America.2011 $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Other[A] America TotalRevenueThird parties 5,038 4,227 1,823 3,143 3,369 342 96 18,038Sales between businesses 10,379 14,495 1,160 10,986 4,016 6,710 1,570 49,316Total 15,417 18,722 2,983 14,129 7,385 7,052 1,666 67,354Production costs excluding taxes 2,243 1,301 386 1,453 2,005 2,979 250 10,617Taxes other than income tax [B] 390 588 300 1,499 59 – 180 3,016Exploration 288 326 178 493 745 110 126 2,266Depreciation, depletion and amortisation 1,473 1,008 351 1,181 2,427 1,575 352 8,367Other (costs)/income (1,670) (3,242) (331) 1,071 797 (2,080) 504 (4,951)Earnings before taxation 9,353 12,257 1,437 10,574 2,946 308 1,262 38,137Taxation charge/(credit) 6,048 9,748 (15) 6,511 714 165 471 23,642Earnings after taxation 3,305 2,509 1,452 4,063 2,232 143 791 14,495[A] Comprises Canada and Greenland.[B] Includes cash paid royalties to governments outside North America.2010 $ MILLIONNorth America SouthEurope Asia Oceania Africa USA Other[A] America TotalRevenueThird parties 4,100 2,755 1,674 2,215 3,547 487 121 14,899Sales between businesses 8,572 10,672 980 8,225 3,153 4,101 1,356 37,059Total 12,672 13,427 2,654 10,440 6,700 4,588 1,477 51,958Production costs excluding taxes 2,186 1,106 287 1,244 1,700 2,257 209 8,989Taxes other than income tax [B] 303 333 284 1,019 100 – 154 2,193Exploration 335 275 110 294 730 167 125 2,036Depreciation, depletion and amortisation 2,690 748 436 1,192 1,858 3,178 636 10,738Other (costs)/income (1,144) (2,748) 2,479 497 (528) (1,324) 72 (2,696)Earnings before taxation 6,014 8,217 4,016 7,188 1,784 (2,338) 425 25,306Taxation charge/(credit) 2,915 6,752 524 4,564 542 (614) 132 14,815Earnings after taxation 3,099 1,465 3,492 2,624 1,242 (1,724) 293 10,491FINANCIAL STATEMENTS AND SUPPLEMENTS[A] Comprises Canada and Greenland.[B] Includes cash paid royalties to governments outside North America.

154 Shell Annual Report and Form 20-F 2012 reports.shell.comSupplementary information – oil and gas (unaudited) > Oil and gas exploration and production activities earningsShell share of equity-accounted investments2012 $ MILLIONNorth America SouthEurope Asia Oceania[A] Africa USA Other America TotalThird party revenue 6,448 12,592 1,441 – 2,715 – 341 23,537Total 6,448 12,592 1,441 – 2,715 – 341 23,537Production costs excluding taxes 411 952 372 – 453 – 41 2,229Taxes other than income tax [B] 3,574 4,861 111 – 157 – 118 8,821Exploration 17 391 155 – 10 – – 573Depreciation, depletion and amortisation 209 1,310 335 – 269 – 41 2,164Other income/(costs) 390 (128) 80 – (13) – (252) 77Earnings before taxation 2,627 4,950 548 – 1,813 – (111) 9,827Taxation 969 1,971 136 – 658 – 26 3,760Earnings after taxation 1,658 2,979 412 – 1,155 – (137) 6,067[A] Includes Shell’s ownership of 23% of Woodside Petroleum Ltd as from April 2012 (previously: 24%), a publicly listed company on the Australian SecuritiesExchange. We have limited access to data; accordingly, the numbers are estimated.[B] Includes cash paid royalties to governments outside North America.2011 $ MILLIONNorth America SouthEurope Asia Oceania[A] Africa USA Other America TotalThird party revenue 5,688 11,021 1,271 – 2,807 – 318 21,105Total 5,688 11,021 1,271 – 2,807 – 318 21,105Production costs excluding taxes 353 932 247 – 457 – 41 2,030Taxes other than income tax [B] 2,990 4,358 74 – 127 – 89 7,638Exploration 13 60 89 – 8 – – 170Depreciation, depletion and amortisation 237 1,250 246 – 211 – 35 1,979Other income/(costs) 349 (30) (141) – 103 – (108) 173Earnings before taxation 2,444 4,391 474 – 2,107 – 45 9,461Taxation 940 1,983 174 – 765 – 45 3,907Earnings after taxation 1,504 2,408 300 – 1,342 – – 5,554[A] Includes Shell’s ownership of 24% of Woodside Petroleum Ltd, a publicly listed company on the Australian Securities Exchange. We have limited access todata; accordingly, the numbers are estimated.[B] Includes cash paid royalties to governments outside North America.2010 $ MILLIONNorth America SouthEurope Asia Oceania[A] Africa USA Other America TotalThird party revenue 5,027 6,895 1,471 – 2,023 – 196 15,612Total 5,027 6,895 1,471 – 2,023 – 196 15,612Production costs excluding taxes 355 815 196 – 449 – 64 1,879Taxes other than income tax [B] 2,471 2,416 139 – 35 – 9 5,070Exploration 19 8 111 – 4 – – 142Depreciation, depletion and amortisation 247 1,177 303 – 270 – 30 2,027Other income/(costs) 337 (56) 3 – 18 – 43 345Earnings before taxation 2,272 2,423 725 – 1,283 – 136 6,839Taxation 878 1,338 207 – 465 – 136 3,024Earnings after taxation 1,394 1,085 518 – 818 – – 3,815[A] Includes Shell’s ownership of 24% of Woodside Petroleum Ltd as from November 2010 (previously: 34%), a publicly listed company on the AustralianSecurities Exchange. We have limited access to data; accordingly, the numbers are estimated.[B] Includes cash paid royalties to governments outside North America.

eports.shell.com Shell Annual Report and Form 20-F 2012 155Supplementary information – oil and gas (unaudited) > Acreage and wellsACREAGE AND WELLSThe tables below reflect Shell subsidiaries and equity-accountedinvestments acreage and wells.The term “gross” refers to the total activity in which Shell subsidiariesand equity-accounted investments have an interest. The term “net” refersto the sum of the fractional interests owned by Shell subsidiaries plus theShell share of equity-accounted investments’ fractional interests.OIL AND GAS ACREAGE (AT DECEMBER 31)THOUSAND ACRES2012 2011 2010Developed Undeveloped Developed Undeveloped Developed UndevelopedGross Net Gross Net Gross Net Gross Net Gross Net Gross NetEurope 9,091 2,659 5,844 1,964 9,016 2,586 6,688 2,376 8,983 2,550 8,165 3,265Asia 26,989 9,400 53,460 26,604 27,268 9,810 48,554 25,779 27,496 9,970 41,781 22,800Oceania 1,703 467 70,575 26,469 1,798 500 67,907 26,326 2,274 553 81,748 24,413Africa 5,428 2,299 30,404 23,460 6,060 2,465 20,706 15,364 6,701 2,424 23,327 17,079North America – USA 1,837 1,176 8,878 6,990 1,592 984 7,815 6,140 1,568 952 7,003 5,834North America – Other [A] 1,181 785 36,179 27,349 1,101 757 31,573 23,849 1,002 664 31,501 21,489South America 162 76 17,242 9,668 162 76 20,655 8,905 162 76 15,878 6,588Total 46,391 16,862 222,582 122,504 46,997 17,178 203,898 108,739 48,186 17,189 209,403 101,468[A] Comprises Canada and Greenland.NUMBER OF PRODUCTIVE WELLS (AT DECEMBER 31) [A]2012 2011 2010Oil Gas Oil Gas Oil GasGross Net Gross Net Gross Net Gross Net Gross Net Gross NetEurope 1,431 425 1,266 398 1,454 427 1,317 430 1,464 412 1,341 443Asia 7,200 2,316 243 116 7,361 2,352 289 162 7,236 2,382 298 164Oceania 48 5 574 217 48 5 557 212 39 4 608 211Africa 837 324 95 62 883 357 98 65 1,180 447 89 59North America – USA 15,108 7,630 4,618 2,808 14,993 7,607 3,449 2,222 15,322 7,771 3,884 2,457North America – Canada 460 393 1,165 880 476 406 1,115 906 433 370 1,007 764South America 73 29 7 2 67 33 7 2 73 34 6 1Total 25,157 11,122 7,968 4,483 25,282 11,187 6,832 3,999 25,747 11,420 7,233 4,099[A] The number of productive wells with multiple completions (more than one formation producing into the same well bore) was 1,923 gross at December 31,2012 (net 696); 2011: 1,997 gross (net 739); 2010: 2,011 gross (net 779).NUMBER OF NET PRODUCTIVE WELLS AND DRY HOLES DRILLED2012 2011 2010Productive Dry Productive Dry Productive DryExploratory [A]Europe 1 1 1 1 2 4Asia 3 4 6 97 8 28Oceania – 1 – 2 – 2Africa 3 7 3 5 8 5North America – USA 124 3 70 2 75 5North America – Canada 37 9 21 4 29 8South America – 1 1 1 1 1Total 168 26 102 112 123 53DevelopmentEurope 9 – 12 1 20 1Asia 255 4 196 8 269 4Oceania 7 – – – 3 –Africa 25 – 23 2 11 –North America – USA 352 – 347 2 388 –North America – Canada 49 2 102 1 34 –South America 1 – 1 – 1 –Total 698 6 681 14 726 5FINANCIAL STATEMENTS AND SUPPLEMENTS[A] Productive wells are wells with proved reserves allocated. Exploratory wells in the process of drilling are excluded and presented separately on page 156.

156 Shell Annual Report and Form 20-F 2012 reports.shell.comSupplementary information – oil and gas (unaudited) > Acreage and wellsNUMBER OF WELLS IN THE PROCESS OF EXPLORATORY DRILLING [A] 2012At January 1Wells in the process ofdrilling at January 1 andproved reserves allocatedduring the yearWells in the process ofdrilling at January 1 anddetermined as dryduring the yearNew wells in the processof drilling at December 31 At December 31Gross Net Gross Net Gross Net Gross Net Gross NetEurope 24 6 (8) (2) (7) (2) 5 3 14 5Asia 101 47 (19) (8) (10) (4) 33 22 105 57Oceania 333 94 – – (10) (5) 142 67 465 156Africa 39 24 (4) (2) (11) (8) 16 10 40 24North America – USA 235 167 (153) (98) (2) (1) 162 146 242 214North America – Canada 145 142 (48) (46) (18) (18) 67 58 146 136South America 11 5 – – (4) (2) 3 2 10 5Total 888 485 (232) (156) (62) (40) 428 308 1,022 597[A] Wells in the process of drilling includes exploratory wells temporarily suspended.NUMBER OF WELLS IN THE PROCESS OF DEVELOPMENT DRILLING [A] 2012At January 1 At December 31Gross Net Gross NetEurope 14 3 13 3Asia 69 20 50 16Oceania 3 1 24 6Africa 8 4 7 2North America – USA 191 105 211 127North America – Canada 16 13 58 50South America 1 – 7 4Total 302 146 370 208[A] In addition to the present activities mentioned above, Shell has ongoing activities related to the installation of waterflood projects in Europe, Asia, Africa andNorth America. Activities related to steam floods are in progress in Europe, Asia and North America, and gas compression is being installed in Europe andAsia.

eports.shell.com Shell Annual Report and Form 20-F 2012 157Independent Auditors’ Report to the Members of Royal Dutch Shell plcINDEPENDENT AUDITORS’REPORT TO THE MEMBERSOF ROYAL DUTCH SHELL PLCWe have audited the Parent Company Financial Statements of RoyalDutch Shell plc (the Company) for the year ended December 31,2012, which comprise the Statement of Income, the Statement ofComprehensive Income, the Balance Sheet, the Statement of Changesin Equity, the Statement of Cash Flows and the related Notes. Thefinancial reporting framework that has been applied in theirpreparation is applicable law and International Financial ReportingStandards (IFRSs) as adopted by the European Union.RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORSAs explained more fully in the statement of the Directors’responsibilities in respect of the preparation of the financial statementsset out on page 57, the Directors are responsible for the preparationof the Parent Company Financial Statements and for being satisfiedthat they give a true and fair view. Our responsibility is to audit andexpress an opinion on the Parent Company Financial Statements inaccordance with applicable law and International Standards onAuditing (UK and Ireland). Those standards require us to comply withthe Auditing Practices Board’s Ethical Standards for Auditors.This report, including the opinions, has been prepared for and only forthe Company’s members as a body in accordance with Chapter 3 ofPart 16 of the Companies Act 2006 and for no other purpose. We donot, in giving these opinions, accept or assume responsibility for anyother purpose or to any other person to whom this report is shown orinto whose hands it may come save where expressly agreed by ourprior consent in writing.SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTSAn audit involves obtaining evidence about the amounts anddisclosures in the Parent Company Financial Statements sufficient togive reasonable assurance that the Parent Company FinancialStatements are free from material misstatement, whether caused byfraud or error. This includes an assessment of: whether the accountingpolicies are appropriate to the Company’s circumstances and havebeen consistently applied and adequately disclosed; thereasonableness of significant accounting estimates made by theDirectors; and the overall presentation of the Parent CompanyFinancial Statements. In addition, we read all the financial and nonfinancialinformation in the Royal Dutch Shell plc Annual Report andForm 20-F for 2012 to identify material inconsistencies with theaudited Parent Company Financial Statements. If we become aware ofany apparent material misstatements or inconsistencies we considerthe implications for our report.OPINION ON FINANCIAL STATEMENTSIn our opinion the Parent Company Financial Statements:▪ give a true and fair view of the state of the Company’s affairs as atDecember 31, 2012, and of its income and cash flows for the yearthen ended;▪ have been properly prepared in accordance with IFRSs as adoptedby the European Union; and▪ have been prepared in accordance with the requirements of theCompanies Act 2006.SEPARATE OPINION IN RELATION TO IFRSs AS ISSUED BY THEIASBAs explained in Note 1 to the Parent Company Financial Statements,the Company in addition to complying with its legal obligation toapply IFRSs as adopted by the European Union, has also applied IFRSsas issued by the International Accounting Standards Board (IASB).In our opinion the Parent Company Financial Statements comply withIFRSsasissuedbytheIASB.OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIESACT 2006In our opinion:▪ the part of the Directors’ Remuneration Report to be audited has beenproperly prepared in accordance with the Companies Act 2006;and▪ the information given in the Report of the Directors for the financialyear for which the Parent Company Financial Statements areprepared is consistent with the Parent Company FinancialStatements.MATTERS ON WHICH WE ARE REQUIRED TO REPORT BYEXCEPTIONWe have nothing to report in respect of the following matters wherethe Companies Act 2006 requires us to report to you if, in our opinion:▪ adequate accounting records have not been kept by the Company,or returns adequate for our audit have not been received frombranches not visited by us; or▪ the Parent Company Financial Statements and the part of theDirectors’ Remuneration Report to be audited are not in agreementwith the accounting records and returns; or▪ certain disclosures of Directors’ remuneration specified by law arenot made; or▪ we have not received all the information and explanations werequire for our audit.OTHER MATTERWe have reported separately on the Consolidated Financial Statementsof Royal Dutch Shell plc for the year ended December 31, 2012.Stephen Johnson (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsLondonMarch 13, 2013Note:▪ The maintenance and integrity of the Royal Dutch Shell plc website(www.shell.com) are the responsibility of the Directors; the workcarried out by the auditors does not involve consideration of thesematters and, accordingly, the auditors accept no responsibility for anychanges that may have occurred to the Parent Company FinancialStatements since they were initially presented on the website.▪ Legislation in the United Kingdom governing the preparation anddissemination of financial statements may differ from legislation inother jurisdictions.FINANCIAL STATEMENTS AND SUPPLEMENTS

158 Shell Annual Report and Form 20-F 2012 reports.shell.comParent Company Financial StatementsINDEX TO THE PARENTCOMPANY FINANCIALSTATEMENTSThe Parent Company Financial Statements have not been audited in accordance with the standards of the Public Company Accounting OversightBoard (United States).159 Statement of Income159 Statement of Comprehensive Income159 Balance Sheet160 Statement of Changes in Equity160 Statement of Cash Flows161 Notes to the Parent Company Financial Statements161 Note 1 Basis of preparation161 Note 2 Accounting policies162 Note 3 Finance income/(expense)162 Note 4 Remuneration of Directors and Senior Management162 Note 5 Investments in subsidiaries162 Note 6 Taxation163 Note 7 Accounts receivable163 Note 8 Cash and cash equivalents163 Note 9 Financial instruments and other derivative contracts164 Note 10 Accounts payable and accrued liabilities164 Note 11 Share capital165 Note 12 Other reserves166 Note 13 Dividends166 Note 14 Related parties167 Note 15 Legal proceedings and other contingencies167 Note 16 Auditors’ remuneration

eports.shell.com Shell Annual Report and Form 20-F 2012 159Parent Company Financial StatementsSTATEMENT OF INCOME$ MILLIONNOTES 2012 2011Dividend income 3,807 13,438Finance income 3 320 79Administrative expenses (70) (103)Finance expense 3 (24) (225)Income before taxation 4,033 13,189Taxation 6 53 6Income for the period 4,086 13,195All results are from continuing activities.STATEMENT OF COMPREHENSIVE INCOME$ MILLION2012 2011Income for the period 4,086 13,195Comprehensive income for the period 4,086 13,195BALANCE SHEET$ MILLIONNOTES Dec 31, 2012 Dec 31, 2011AssetsNon-current assetsInvestments in subsidiaries 5 202,490 202,291Deferred tax 6 351 350202,841 202,641Current assetsAccounts receivable 7 12,902 17,433Cash and cash equivalents 8 120 12113,022 17,554Total assets 215,863 220,195LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities 10 1,015 1,1101,015 1,110Total liabilities 1,015 1,110EquityShare capital 11 542 536Other reserves 12 202,052 201,606Retained earnings 12,254 16,943Total equity 214,848 219,085Total liabilities and equity 215,863 220,195Signed on behalf of the Board/s/ Simon HenrySimon HenryChief Financial OfficerMarch 13, 2013FINANCIAL STATEMENTS AND SUPPLEMENTSThe Notes on pages 161 to 167 form an integral part of these Parent Company Financial Statements.

160 Shell Annual Report and Form 20-F 2012 reports.shell.comParent Company Financial StatementsSTATEMENT OF CHANGES IN EQUITY$ MILLIONNOTESSharecapitalOtherreservesRetainedearnings Total equityAt January 1, 2012 536 201,606 16,943 219,085Comprehensive income for the period – – 4,086 4,086Dividends paid 13 – – (10,955) (10,955)Scrip dividends 13 9 (9) 3,565 3,565Repurchases of shares 12 (3) 3 (1,728) (1,728)Share-based compensation 12 – 452 343 795At December 31, 2012 542 202,052 12,254 214,848At January 1, 2011 529 201,542 11,142 213,213Comprehensive income for the period – – 13,195 13,195Dividends paid 13 – – (10,457) (10,457)Scrip dividends 13 10 (10) 3,580 3,580Repurchases of shares 12 (3) 3 (1,106) (1,106)Share-based compensation 12 – 71 589 660At December 31, 2011 536 201,606 16,943 219,085STATEMENT OF CASH FLOWS$ MILLIONNOTES 2012 2011Cash flow from operating activitiesIncome for the period 4,086 13,195Adjustment for:Dividend income (3,807) (13,438)Taxation (53) (6)Unrealised foreign exchange (gains)/losses (293) 205Interest income (26) (79)Interest expense 24 17Share-based compensation 51 69Decrease/(increase) in working capital 5,090 (17,097)Net cash from/(used in) operating activities (pre-tax) 5,072 (17,134)Taxation refunded – 11Net cash from/(used in) operating activities 5,072 (17,123)Cash flow from investing activitiesDividends received 3,807 13,438Interest received 26 79Net cash from investing activities 3,833 13,517Cash flow from financing activitiesCash dividends paid 13 (7,390) (6,877)Repurchases of shares (1,492) (1,106)Interest paid (24) (17)Net cash used in financing activities (8,906) (8,000)Decrease in cash and cash equivalents (1) (11,606)Cash and cash equivalents at January 1 121 11,727Cash and cash equivalents at December 31 8 120 121The Notes on pages 161 to 167 form an integral part of these Parent Company Financial Statements.

eports.shell.com Shell Annual Report and Form 20-F 2012 161Parent Company Financial Statements > Notes to the Parent Company Financial StatementsNOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS1 BASIS OF PREPARATIONThe Financial Statements of Royal Dutch Shell plc (the Company) have been prepared in accordance with the provisions of the Companies Act2006 and with International Financial Reporting Standards (IFRS) as adopted by the European Union. As applied to the Company, there are nomaterial differences with IFRS as issued by the International Accounting Standards Board (IASB); therefore, the Financial Statements have beenprepared in accordance with IFRS as issued by the IASB.As described in the accounting policies in Note 2, the Financial Statements have been prepared under the historical cost convention except forcertain items measured at fair value. Those accounting policies have been applied consistently in all periods presented and there were nomaterial changes during 2012.The Financial Statements were approved and authorised for issue by the Board of Directors on March 13, 2013.The preparation of financial statements in conformity with IFRS requires the use of certain accounting estimates. It also requires management toexercise its judgement in the process of applying the Company’s accounting policies. Actual results may differ from those estimates.The financial results of the Company are included in the Consolidated Financial Statements on pages 99-137. The financial results of theCompany incorporate the results of the Dividend Access Trust (the Trust), the financial statements for which are presented on pages 171-174.The Company’s principal activity is being the parent company for Shell, as described in Note 1 to the Consolidated Financial Statements. Itconducts itself wholly within the Corporate business segment (see Note 4 to the Consolidated Financial Statements).2 ACCOUNTING POLICIESThe Company’s accounting policies follow those of Shell as set out in Note 2 to the Consolidated Financial Statements. Key accounting estimatesand judgements affecting the assessment and measurement of impairment follow those set out in Note 3 to the Consolidated Financial Statements.The following are the principal accounting policies that specifically relate to the Company:Presentation currencyThe Company’s presentation and functional currency is US dollars (dollars).TaxationThe Company is tax-resident in the Netherlands. For the assessment of corporate income tax in the Netherlands, the Company and certain of itssubsidiaries form a fiscal unit, in respect of which the Company recognises in its financial statements any current tax payable or receivable for thefiscal unit as a whole.The Company’s tax charge or credit recognised in income is calculated at the statutory tax rate prevailing in the Netherlands.InvestmentsInvestments in subsidiaries are stated at cost, net of any impairment.The original cost of the Company’s investment in Royal Dutch Petroleum Company (Royal Dutch) was based on the fair value of the sharestransferred to the Company by the former shareholders of Royal Dutch in exchange for A shares in the Company during the public exchange offerin 2005. The original cost of the Company’s investment in The “Shell” Transport and Trading Company, p.l.c., now The Shell Transport andTrading Company Limited (Shell Transport), was the fair value of the shares held by the former shareholders of The “Shell” Transport and TradingCompany, p.l.c. transferred in consideration for the issuance of B shares as part of the Scheme of Arrangement in 2005. The Company’sinvestments in Royal Dutch and Shell Transport now represent an investment in Shell Petroleum N.V. (Shell Petroleum); this change had no impacton the cost of investments in subsidiaries.FINANCIAL STATEMENTS AND SUPPLEMENTSShare-based compensation plansThe fair value of share-based compensation for equity-settled plans granted to subsidiary employees under the Company’s schemes is recognisedas an investment in subsidiaries from the date of grant over the vesting period with a corresponding increase in equity. In the year of vesting of aplan, the costs for the actual deliveries are recharged to the relevant employing subsidiaries. This is recognised as a repayment of the investmentoriginally booked. If the actual vesting costs are higher than the cumulatively recognised share-based compensation charge, the difference isrecognised in income.Information on the principal plans, including vesting conditions and shares granted, vested and expired or forfeited during the year, is set out inNote 22 to the Consolidated Financial Statements.

162 Shell Annual Report and Form 20-F 2012 reports.shell.comParent Company Financial Statements > Notes to the Parent Company Financial Statements[Note 2 continued]Dividend incomeInterim dividends are recognised on a paid basis unless the dividend has been confirmed by a general meeting of Shell Transport or of ShellPetroleum, in which case income is recognised on declaration date.3 FINANCE INCOME/(EXPENSE)$ MILLION2012 2011Finance incomeInterest income 26 79Foreign exchange gains 294 –Total 320 79Finance expenseInterest expense (24) (17)Foreign exchange losses – (208)Total (24) (225)4 REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENTRemuneration of Directors and Senior Management, consisting of short-term benefits, retirement benefits, share-based compensation and gainsrealised on the exercise of share options, is set out in Note 5 to the Consolidated Financial Statements. Of these amounts, $49 million(2011: $38 million) is borne by the Company and is presented within administrative expenses.5 INVESTMENTS IN SUBSIDIARIES$ MILLION2012 2011At January 1 202,291 202,160Share-based compensation 867 644Recharge of vested share-based compensation (731) (657)Other 63 144At December 31 202,490 202,2916 TAXATIONA – Taxation credit$ MILLION2012 2011Current taxationCredit in respect of current period (44) (12)Total (44) (12)Deferred taxationRelating to the origination and reversal of temporary differences (9) 6Total (9) 6Total taxation credit (53) (6)

eports.shell.com Shell Annual Report and Form 20-F 2012 163Parent Company Financial Statements > Notes to the Parent Company Financial Statements[Note 6 continued]The applicable tax charge at the statutory tax rate reconciles to the actual taxation credit as follows:$ MILLION2012 2011Income before taxation 4,033 13,189Applicable tax charge at the statutory tax rate of 25.0% (2011: 25.0%) 1,008 3,297Income not subject to tax (1,026) (3,361)Expenses not deductible for tax purposes 12 52Other reconciling items (47) 6Taxation credit (53) (6)B – Taxes payableTaxes payable are reported within accounts payable and accrued liabilities (see Note 10).C – Deferred tax assets$ MILLION2012 2011At January 1 350 252Recognised in income 9 (6)Other movements (8) 104At December 31 351 350Deferred tax assets are recognised in respect of tax losses, which are available for relief against future taxable profits for up to nine years fromthe year in which the loss was incurred.7 ACCOUNTS RECEIVABLE$ MILLIONDec 31, 2012 Dec 31, 2011Amounts due from subsidiaries (see Note 14) 12,901 17,433Other receivables 1 –Total 12,902 17,4338 CASH AND CASH EQUIVALENTSCash and cash equivalents comprised call deposits in euros, sterling and dollars with Shell Treasury Centre Limited, a subsidiary. The Companyearned interest on these balances of $nil in 2012 (2011: $3 million). Interest on euro balances is calculated at EONIA less 0.125% (2011:EONIA less 0.15%), on sterling balances at LIBOR (2011: LIBOR) and on dollar balances at US LIBOR less 0.125% (2011: US LIBID).9 FINANCIAL INSTRUMENTS AND OTHER DERIVATIVE CONTRACTSFinancial assets and liabilities in the Company’s Balance Sheet comprise cash and cash equivalents (see Note 8), accounts receivable (seeNote 7) and certain amounts reported within accounts payable and accrued liabilities (see Note 10).Foreign exchange derivatives are used by the Company to manage foreign exchange risk. Foreign exchange risk arises when certain transactionsare denominated in a currency that is not the Company’s functional currency. There are no derivative financial instruments held at December 31,2012 or 2011.FINANCIAL STATEMENTS AND SUPPLEMENTSThe fair value of financial assets and liabilities at December 31, 2012 and 2011, all of which fall due within 12 months, approximates theircarrying amount.Information on financial risk management is presented in Note 21 to the Consolidated Financial Statements.

164 Shell Annual Report and Form 20-F 2012 reports.shell.comParent Company Financial Statements > Notes to the Parent Company Financial Statements10 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES$ MILLIONDec 31, 2012 Dec 31, 2011Amounts owed to subsidiaries (see Note 14) 654 965Withholding tax payable 117 135Accruals and other liabilities 242 8Unclaimed dividends 2 2Total 1,015 1,11011 SHARE CAPITALISSUED AND FULLY PAIDNUMBER OF SHARESOrdinary shares of €0.07 each Sterling deferredA B shares of £1 eachAt January 1, 2012 3,668,550,437 2,661,403,172 50,000Scrip dividends 103,838,250 – –Repurchases of shares – (43,687,983) –At December 31, 2012 3,772,388,687 2,617,715,189 50,000At January 1, 2011 3,563,952,539 2,695,808,103 50,000Scrip dividends 104,597,898 – –Repurchases of shares – (34,404,931) –At December 31, 2011 3,668,550,437 2,661,403,172 50,000NOMINAL VALUE$ MILLIONOrdinary shares of €0.07 eachA B TotalAt January 1, 2012 312 224 536Scrip dividends 9 – 9Repurchases of shares – (3) (3)At December 31, 2012 321 221 542At January 1, 2011 302 227 529Scrip dividends 10 – 10Repurchases of shares – (3) (3)At December 31, 2011 312 224 536The total nominal value of sterling deferred shares is less than $1 million.The B shares repurchased in 2012 and 2011 under the Company’s share buyback programme were all cancelled.At the Company’s Annual General Meeting on May 22, 2012, the Board was authorised to allot ordinary shares in the Company, and to grantrights to subscribe for or to convert any security into ordinary shares in the Company, up to an aggregate nominal amount of €147 million(representing 2,100 million ordinary shares of €0.07 each), and to list such shares or rights on any stock exchange. This authority expires at theearlier of the close of business on August 22, 2013, and the end of the Annual General Meeting to be held in 2013, unless previously renewed,revokedorvariedbytheCompanyinageneralmeeting.The B shares rank pari passu in all respects with the A shares except for the dividend access mechanism described below. The Company and ShellTransport can procure the termination of the dividend access mechanism at any time. Upon such termination, the B shares will form one class withthe A shares ranking pari passu in all respects and the A and B shares will be known as ordinary shares without further distinction.The sterling deferred shares are redeemable only at the discretion of the Company for £1 each and carry no voting rights. There are no furtherrights to participate in profits or assets, including the right to receive dividends. Upon winding up or liquidation, the shares carry a right torepayment of paid-up nominal value, ranking ahead of the A and B shares.For information on the number of shares in the Company held by Shell employee share ownership trusts and in connection with share-basedcompensation plans, refer to Note 22 to the Consolidated Financial Statements.Dividend access mechanism for B sharesGENERALDividends paid on A shares have a Dutch source for tax purposes and are subject to Dutch withholding tax.

eports.shell.com Shell Annual Report and Form 20-F 2012 165Parent Company Financial Statements > Notes to the Parent Company Financial Statements[Note 11 continued]It is the expectation and the intention, although there can be no certainty, that holders of B shares will receive dividends via the dividend accessmechanism. Any dividends paid on the dividend access share will have a UK source for Dutch and UK tax purposes; there will be no UK or Dutchwithholding tax on such dividends and certain holders (not including US holders) of B shares or B American Depositary Shares (ADSs) will beentitled to a UK tax credit in respect of their proportional share of such dividends.DESCRIPTION OF DIVIDEND ACCESS MECHANISMA dividend access share has been issued by Shell Transport to Computershare Trustees (Jersey) Limited (formerly EES Trustees InternationalLimited) as dividend access trustee (the Trustee). EES Trustees International Limited replaced Lloyds TSB Offshore Trust Company Limited as Trusteeon January 26, 2012. Pursuant to a declaration of trust, the Trustee will hold any dividends paid in respect of the dividend access share on trustfor the holders of B shares from time to time and will arrange for prompt disbursement of such dividends to holders of B shares. Interest and otherincome earned on unclaimed dividends will be for the account of Shell Transport and any dividends that are unclaimed after 12 years will revertto Shell Transport. Holders of B shares will not have any interest in the dividend access share and will not have any rights against Shell Transportas issuer of the dividend access share. The only assets held on trust for the benefit of the holders of B shares will be dividends paid to the Trusteein respect of the dividend access share.The declaration and payment of dividends on the dividend access share will require Board action by Shell Transport and will be subject to anyapplicable legal or articles limitations in effect from time to time. In no event will the aggregate amount of the dividend paid by Shell Transportunder the dividend access mechanism for a particular period exceed the aggregate amount of the dividend declared by the Company’s Board onthe B shares in respect of the same period.OPERATION OF THE DIVIDEND ACCESS MECHANISMIf, in connection with the declaration of a dividend by the Company on the B shares, the Board of Shell Transport elects to declare and pay adividend on the dividend access share to the Trustee, the holders of the B shares will be beneficially entitled to receive their share of that dividendpursuant to the declaration of trust (and arrangements will be made to ensure that the dividend is paid in the same currency in which they wouldhave received a dividend from the Company).If any amount is paid by Shell Transport by way of a dividend on the dividend access share and paid by the Trustee to any holder of B shares, thedividend which the Company would otherwise pay on the B shares will be reduced by an amount equal to the amount paid to such holders ofB shares by the Trustee.The Company will have a full and unconditional obligation, in the event that the Trustee does not pay an amount to holders of B shares on a cashdividend payment date (even if that amount has been paid to the Trustee), to pay immediately the dividend declared on the B shares. The right ofholders of B shares to receive distributions from the Trustee will be reduced by an amount equal to the amount of any payment actually made bythe Company on account of any dividend on B shares.The dividend access mechanism may be suspended or terminated at any time by the Company’s Directors or the Directors of Shell Transport, forany reason and without financial recompense. This might, for instance, occur in response to changes in relevant tax legislation.12 OTHER RESERVES$ MILLIONShare premiumreserveCapital redemptionreserveShare planreserveOtherreserveTotalAt January 1, 2012 154 60 1,027 200,365 201,606Scrip dividends – – – (9) (9)Repurchases of shares – 3 – – 3Share-based compensation – – 452 – 452At December 31, 2012 154 63 1,479 200,356 202,052At January 1, 2011 154 57 956 200,375 201,542Scrip dividends – – – (10) (10)Repurchases of shares – 3 – – 3Share-based compensation – – 71 – 71At December 31, 2011 154 60 1,027 200,365 201,606FINANCIAL STATEMENTS AND SUPPLEMENTSOn January 6, 2006, loan notes were converted into 4,827,974 A shares. The difference between the value of the loan notes and the value of thenew shares issued was credited to the share premium reserve.The capital redemption reserve was established in connection with repurchases of shares of the Company.

166 Shell Annual Report and Form 20-F 2012 reports.shell.comParent Company Financial Statements > Notes to the Parent Company Financial Statements[Note 12 continued]The share plan reserve represents the fair value of share-based compensation granted to employees of subsidiaries under the Company’s equitysettledschemes.The other reserve was established as a consequence of the Company becoming the single parent company of Royal Dutch and Shell Transportand represented the difference between the cost of the investment in those companies and the nominal value of shares issued in exchange forthose investments as required by the prevailing legislation at that time, section 131 of the Companies Act 1985.13 DIVIDENDS$ MILLIONCash Scrip TotalInterimMarch 22, 2012 $0.42 per A share 816 728 1,544March 22, 2012 $0.42 per B share 855 271 1,126InterimJune 21, 2012 $0.43 per A share 1,008 597 1,605June 21, 2012 $0.43 per B share 1,104 51 1,155InterimSeptember 20, 2012 $0.43 per A share 937 680 1,617September 20, 2012 $0.43 per B share 1,036 111 1,147InterimDecember 20, 2012 $0.43 per A share 822 798 1,620December 20, 2012 $0.43 per B share 812 329 1,141Total 7,390 3,565 10,955InterimMarch 25, 2011 $0.42 per A share 820 681 1,501March 25, 2011 $0.42 per B share 738 387 1,125InterimJune 27, 2011 $0.42 per A share 890 601 1,491June 27, 2011 $0.42 per B share 878 236 1,114InterimSeptember 19, 2011 $0.42 per A share 912 571 1,483September 19, 2011 $0.42 per B share 954 148 1,102InterimDecember 16, 2011 $0.42 per A share 818 703 1,521December 16, 2011 $0.42 per B share 867 253 1,120Total 6,877 3,580 10,457In addition, on January 31, 2013, the Directors announced a further interim dividend in respect of 2012 of $0.43 per A share and $0.43 per B share.The total dividend is estimated to be $2,748 million and is payable on March 28, 2013. Under the Scrip Dividend Programme, shareholders can electto receive dividends in the form of A shares. The cash dividends on the B shares are paid via the Trust (see Note 11).Dividends on A shares are by default paid in euros, although holders may elect to receive dividends in sterling. Dividends on B shares are bydefault paid in sterling, although holders may elect to receive dividends in euros. Dividends on ADSs are paid in dollars.14 RELATED PARTIESSignificant subsidiaries at December 31, 2012, and Shell’s percentage interest therein, are set out in Exhibit 8. The Company has no directinterest in jointly controlled entities and associates. Shell’s major investments in jointly controlled entities and associates at December 31, 2012,are set out in Note 10 to the Consolidated Financial Statements. A complete list of investments in subsidiaries, jointly controlled entities andassociates will be attached to the Company’s annual return made to the Registrar of Companies.$ MILLIONAmounts due from subsidiaries(see Note 7)Amounts owed to subsidiaries(see Note 10)Dec 31, 2012 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011Shell Petroleum 12,901 17,433 285 307Shell Treasury Luxembourg Sarl – – 369 658Total 12,901 17,433 654 965

eports.shell.com Shell Annual Report and Form 20-F 2012 167Parent Company Financial Statements > Notes to the Parent Company Financial Statements[Note 14 continued]The amount due from Shell Petroleum, which is denominated in dollars, is repayable on demand. Interest is calculated at US LIBOR less 0.125%(2011: US LIBOR less 0.1%) and interest income in 2012 was $8 million (2011: $1 million).The net amount due to Shell Treasury Luxembourg Sarl at December 31, 2012, comprises an interest-bearing receivable of €9,545 million(2011: €12,988 million) and an interest-bearing payable of $12,964 million (2011: $17,444 million). Interest on euro balances is calculated atEONIA less 0.125% (2011: EONIA less 0.15%) and on dollar balances at US LIBOR (2011: US LIBOR). Net interest expense on these balancesin 2012 was $7 million (2011: $57 million net interest income).Other transactions and balancesThe Company enters into forward and spot foreign exchange contracts with Treasury companies, which are subsidiaries. At December 31, 2012,there were no open contracts with these companies in respect of foreign exchange contracts.The Company settles general and administrative expenses of the Trust including the auditors’ remuneration.The Company has guaranteed contractual payments totalling $29,477 million at December 31, 2012 (2011: $28,777 million) and relatedinterest in respect of listed debt issued by Shell International Finance B.V.15 LEGAL PROCEEDINGS AND OTHER CONTINGENCIESRefer to Note 25 to the Consolidated Financial Statements.16 AUDITORS’ REMUNERATIONAuditors’ remuneration for 2012 audit services was $153,800 (2011: $152,700).FINANCIAL STATEMENTS AND SUPPLEMENTS

168 Shell Annual Report and Form 20-F 2012 reports.shell.comIndependent Auditors’ Report to Computershare Trustees (Jersey) Limited as Trustee of the Royal Dutch Shell Dividend Access TrustINDEPENDENT AUDITORS’REPORT TO COMPUTERSHARETRUSTEES (JERSEY) LIMITED(FORMERLY EES TRUSTEESINTERNATIONAL LIMITED)AS TRUSTEE OF THE ROYALDUTCH SHELL DIVIDENDACCESS TRUSTWe have audited the Financial Statements of Royal Dutch ShellDividend Access Trust (the Trust) for the year ended December 31,2012, which comprise the Statement of Income, the Statement ofComprehensive Income, the Balance Sheet, the Statement of Changesin Equity, the Statement of Cash Flows and the related Notes. Thefinancial reporting framework that has been applied in theirpreparation is applicable law and International Financial ReportingStandards (IFRSs) as adopted by the European Union.RESPECTIVE RESPONSIBILITIES OF TRUSTEE AND AUDITORSThe Trustee is responsible for the preparation of the FinancialStatements and for being satisfied that they give a true and fair view.Our responsibility is to audit and express an opinion on the FinancialStatements in accordance with applicable law and InternationalStandards on Auditing (UK and Ireland). Those standards require us tocomply with the Auditing Practices Board’s Ethical Standards forAuditors.This report, including the opinions, has been prepared for and only forthe Trustee and the Royal Dutch Shell plc B shareholders as a bodyand for no other purposes. We do not, in giving these opinions,accept or assume responsibility for any other purpose or to any otherperson to whom this report is shown or into whose hands it may comesave where expressly agreed by our prior consent in writing.SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTSAn audit involves obtaining evidence about the amounts anddisclosures in the Financial Statements sufficient to give reasonableassurance that the Financial Statements are free from materialmisstatement, whether caused by fraud or error. This includes anassessment of: whether the accounting policies are appropriate to theTrust’s circumstances and have been consistently applied andadequately disclosed; the reasonableness of significant accountingestimates made by the Trustee; and the overall presentation of theFinancial Statements. In addition, we read all the financial and nonfinancialinformation in the Royal Dutch Shell plc Annual Report andForm 20-F for 2012 to identify material inconsistencies with theaudited Consolidated Financial Statements. If we become aware ofany apparent material misstatements or inconsistencies we considerthe implications for our report.OPINION ON FINANCIAL STATEMENTSIn our opinion the Financial Statements:▪ give a true and fair view of the state of the Trust’s affairs as atDecember 31, 2012, and of its income and cash flows for the yearthen ended; and▪ have been properly prepared in accordance with IFRSs as adoptedby the European Union.SEPARATE OPINION IN RELATION TO IFRSs AS ISSUED BY THE IASBAs explained in Note 2 to the Financial Statements, the Trust inaddition to complying with its legal obligation to apply IFRSs asadopted by the European Union, has also applied IFRSs as issued bythe International Accounting Standards Board (IASB).In our opinion the Financial Statements comply with IFRSs as issued bythe IASB.MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTIONWe have nothing to report in respect of the following matters wherewe would report to you if, in our opinion:▪ proper accounting records have not been kept by the Trust; or▪ the Financial Statements are not in agreement with the accountingrecords; or▪ we have not received all the information and explanations werequire for our audit.PricewaterhouseCoopers CI LLPChartered AccountantsJersey, Channel IslandsMarch 13, 2013Note:▪ The report set out above is included for the purposes of Royal DutchShell plc’s Annual Report and Accounts for 2012 only and does notform part of Royal Dutch Shell plc’s Annual Report on Form 20-F for2012.▪ The maintenance and integrity of the Royal Dutch Shell plc website(www.shell.com) are the responsibility of the Directors; the workcarried out by the auditors does not involve consideration of thesematters and, accordingly, the auditors accept no responsibility forany changes that may have occurred to the Consolidated FinancialStatements since they were initially presented on the website.▪ Legislation in the Jersey governing the preparation anddissemination of financial statements may differ from legislation inother jurisdictions.

eports.shell.com Shell Annual Report and Form 20-F 2012 169Report of Independent Registered Public Accounting FirmREPORT OF INDEPENDENTREGISTERED PUBLICACCOUNTING FIRMTo Computershare Trustees (Jersey) Limited(formerly EES Trustees International Limited) asTrustee of the Royal Dutch Shell DividendAccess Trust and the Board of Directors andShareholders of Royal Dutch Shell plc.In our opinion, the accompanying Statement of Income, the Statementof Comprehensive Income, the Balance Sheet, the Statement ofChanges in Equity, the Statement of Cash Flows and the related Notesto the Financial Statements present fairly, in all material respects, thefinancial position of the Royal Dutch Shell Dividend Access Trust (theTrust) at December 31, 2012, and December 31, 2011, and theresults of its operations and cash flows for each of the three years inthe period ended December 31, 2012, in conformity withInternational Financial Reporting Standards as issued by theInternational Accounting Standards Board and in conformity withInternational Financial Reporting Standards as adopted by theEuropean Union. Also in our opinion, the Trust maintained, in allmaterial respects, effective internal control over financial reporting asof December 31, 2012, based on criteria established in InternalControl – Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). TheTrustee and the management of Royal Dutch Shell plc are responsiblefor these Financial Statements, for maintaining effective internalcontrol over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included inthe Trustee’s and Management’s Report on Internal Control overFinancial Reporting of the Royal Dutch Shell Dividend Access Trust setout on page 84. Our responsibility is to express opinions on theseFinancial Statements and on the Trust’s internal control over financialreporting based on our integrated audits. We conducted our audits inaccordance with the standards of the Public Company AccountingOversight Board (United States). Those standards require that we planand perform the audits to obtain reasonable assurance about whetherthe Financial Statements are free of material misstatement and whethereffective internal control over financial reporting was maintained in allmaterial respects. Our audits of the Financial Statements includedexamining, on a test basis, evidence supporting the amounts anddisclosures in the Financial Statements, assessing the accountingprinciples used and significant estimates made by management, andevaluating the overall financial statement presentation. Our audit ofinternal control over financial reporting included obtaining anunderstanding of internal control over financial reporting, assessingthe risk that a material weakness exists, and testing and evaluating thedesign and operating effectiveness of internal control based on theassessed risk. Our audits also included performing such otherprocedures as we considered necessary in the circumstances. Webelieve that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accountingprinciples. A company’s internal control over financial reportingincludes those policies and procedures that (i) pertain to themaintenance of records that, in reasonable detail, accurately andfairly reflect the transactions and dispositions of the assets of thecompany; (ii) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and thatreceipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of thecompany; and (iii) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition, use, ordisposition of the company’s assets that could have a material effecton the financial statements.Because of its inherent limitations, internal control over financialreporting may not prevent or detect misstatements. Also, projections ofany evaluation of effectiveness to future periods are subject to the riskthat controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies orprocedures may deteriorate./s/ PricewaterhouseCoopers CI LLPJersey, Channel IslandsMarch 13, 2013Note that the report set out above is included for the purposes of RoyalDutch Shell plc’s Annual Report on Form 20-F for 2012 only and doesnot form part of Royal Dutch Shell plc’s Annual Report and Accountsfor 2012.FINANCIAL STATEMENTS AND SUPPLEMENTS

170 Shell Annual Report and Form 20-F 2012 reports.shell.comRoyal Dutch Shell Dividend Access Trust Financial StatementsINDEX TO THE ROYAL DUTCHSHELL DIVIDEND ACCESS TRUSTFINANCIAL STATEMENTS171 Statement of Income171 Statement of Comprehensive Income171 Balance Sheet172 Statement of Changes in Equity172 Statement of Cash Flows173 Notes to the Royal Dutch Shell Dividend Access TrustFinancial Statements173 Note 1 The Trust173 Note 2 Basis of preparation173 Note 3 Accounting policies174 Note 4 Other liabilities174 Note 5 Capital account174 Note 6 Distributions made174 Note 7 Auditors’ remuneration174 Note 8 Financial instruments174 Note 9 Related party transactions

eports.shell.com Shell Annual Report and Form 20-F 2012 171Royal Dutch Shell Dividend Access Trust Financial StatementsSTATEMENT OF INCOME£ MILLION2012 2011 2010Dividend income 2,383 2,175 2,863Income before and after taxation and for the period 2,383 2,175 2,863All results are from continuing activities.STATEMENT OF COMPREHENSIVE INCOME£ MILLION2012 2011 2010Income for the period 2,383 2,175 2,863Comprehensive income for the period 2,383 2,175 2,863BALANCE SHEET£ MILLIONNOTES Dec 31, 2012 Dec 31, 2011AssetsCurrent assetsCash and cash equivalents 1 1Total assets 1 1LiabilitiesCurrent liabilitiesOther liabilities 4 1 1Total liabilities 1 1EquityCapital account 5 – –Revenue account – –Total equity – –Total liabilities and equity 1 1Signed on behalf of Computershare Trustees (Jersey) Limited as Trusteeof the Royal Dutch Shell Dividend Access Trust./s/ Lisa Knowles/s/ Karen KurysLisa KnowlesMarch 13, 2013Karen KurysFINANCIAL STATEMENTS AND SUPPLEMENTSThe Notes on pages 173 to 174 form an integral part of these Royal Dutch Shell Dividend Access Trust Financial Statements.

172 Shell Annual Report and Form 20-F 2012 reports.shell.comRoyal Dutch Shell Dividend Access Trust Financial StatementsSTATEMENT OF CHANGES IN EQUITY£ MILLIONNOTESCapitalaccountRevenueaccountTotalequityAt January 1, 2012 – – –Comprehensive income for the period – 2,383 2,383Distributions made 6 – (2,383) (2,383)At December 31, 2012 – – –At January 1, 2011 – – –Comprehensive income for the period – 2,175 2,175Distributions made 6 – (2,175) (2,175)At December 31, 2011 – – –At January 1, 2010 – – –Comprehensive income for the period – 2,863 2,863Distributions made 6 – (2,863) (2,863)At December 31, 2010 – – –STATEMENT OF CASH FLOWS£ MILLION2012 2011 2010Cash flow from operating activitiesIncome for the period 2,383 2,175 2,863Adjustment for:Dividends received (2,383) (2,175) (2,863)Net cash from operating activities – – –Cash flow from investing activitiesDividends received 2,383 2,175 2,863Net cash from investing activities 2,383 2,175 2,863Cash flow from financing activitiesDistributions made (2,383) (2,175) (2,863)Net cash used in financing activities (2,383) (2,175) (2,863)Change in cash and cash equivalents – – –Cash and cash equivalents at January 1 1 1 1Cash and cash equivalents at December 31 1 1 1The Notes on pages 173 to 174 form an integral part of these Royal Dutch Shell Dividend Access Trust Financial Statements.

eports.shell.com Shell Annual Report and Form 20-F 2012 173Royal Dutch Shell Dividend Access Trust Financial Statements > Notes to the Royal Dutch Shell Dividend Access Trust Financial StatementsNOTES TO THE ROYAL DUTCH SHELL DIVIDEND ACCESS TRUSTFINANCIAL STATEMENTS1THETRUSTThe Royal Dutch Shell Dividend Access Trust (the Trust) was established on May 19, 2005, by The “Shell” Transport and Trading Company, p.l.c.,now The Shell Transport and Trading Company Limited (Shell Transport), and Royal Dutch Shell plc (the Company). The Trust is governed by theapplicable laws of England and Wales and is resident in Jersey. The Trustee of the Trust is Computershare Trustees (Jersey) Limited, following achange of name from EES Trustees International Limited on September 10, 2012, registration number 92182 (the Trustee), Queensway House,Hilgrove Street, St Helier, Jersey, JE1 1ES, replacing Lloyds TSB Offshore Trust Company Limited following a Deed of Novation and Deed ofRetirement and Appointment dated January 26, 2012. The Trust was established as part of a dividend access mechanism.A dividend access share has been issued by Shell Transport to the Trustee. Following the announcement of a dividend by the Company on theB shares, Shell Transport may declare a dividend on the dividend access share.The primary purposes of the Trust are to receive, on behalf of the B shareholders of the Company and in accordance with their respective holdingsof B shares in the Company, any amounts paid by way of dividend on the dividend access share and to pay such amounts to the B shareholderson the same pro rata basis.The Trust shall not endure for a period in excess of 80 years from May 19, 2005, being the date on which the Trust Deed was executed.2 BASIS OF PREPARATIONThe Financial Statements of the Trust have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by theEuropean Union. As applied to the Trust, there are no material differences with IFRS as issued by the International Accounting Standards Board(IASB); therefore, the Financial Statements have been prepared in accordance with IFRS as issued by the IASB.As described in the accounting policies in Note 3, the Financial Statements have been prepared under the historical cost convention. Thoseaccounting policies have been applied consistently in all periods presented and there were no material changes during 2012.The Financial Statements were approved and authorised for issue by the Trustee on March 13, 2013.The preparation of financial statements in conformity with IFRS requires the use of certain accounting estimates. It also requires management toexercise its judgement in the process of applying the Trust’s accounting policies. Actual results may differ from these estimates. The financialresults of the Trust are included in the Consolidated and Parent Company Financial Statements on pages 99-137 and pages 159-167respectively.3 ACCOUNTING POLICIESThe Trust’s accounting policies follow those of Shell as set out in Note 2 to the Consolidated Financial Statements. The following are the principalaccounting policies that specifically relate to the Trust:Presentation currencyThe Trust’s presentation and functional currency is sterling. The Trust’s dividend income and dividends paid are principally in sterling.TaxationThe Trust is not subject to taxation.FINANCIAL STATEMENTS AND SUPPLEMENTSDividend incomeInterim dividends on the dividend access share are recognised on a paid basis unless the dividend has been confirmed by a general meeting ofShell Transport, in which case income is recognised based on the record date of the dividend by the Company on its B shares.

174 Shell Annual Report and Form 20-F 2012 reports.shell.comRoyal Dutch Shell Dividend Access Trust Financial Statements > Notes to the Royal Dutch Shell Dividend Access Trust Financial Statements4 OTHER LIABILITIESOther liabilities consist of £1,202,271 (2011: £997,987) relating to unclaimed dividends, including any dividend cheque payments that haveexpired or have been returned unpresented.5 CAPITAL ACCOUNTThe capital account is represented by the dividend access share of 25 pence settled in the Trust by Shell Transport, which also represents an assetin the Trust. This is classified as equity in the balance sheet.6 DISTRIBUTIONS MADEDistributions are made to the B shareholders of the Company in accordance with the Trust Deed. Refer to Note 13 to the Parent CompanyFinancial Statements for information about dividends per share. Cumulative unclaimed dividends as at December 31, 2012, amounted to£1,202,271 (2011: £997,987). Amounts are recorded as distributed once a wire transfer or cheque is issued. All cheques are valid forone year from the date of issue. Any wire transfers that are not completed are replaced by cheques. To the extent that cheques expire or arereturned unpresented, the Trust records a liability for unclaimed dividends and a corresponding amount of cash.7 AUDITORS’ REMUNERATIONAuditors’ remuneration for 2012 audit services was £33,750 (2011: £33,750; 2010: £33,750).8 FINANCIAL INSTRUMENTSFinancial risk management is carried out by the Trustee and the Company to ensure that relevant policies and procedures are in place to minimiserisk.The Trust, in its normal course of business, is not subject to market risk, credit risk or liquidity risk. The Trustee does not consider that any foreignexchange exposures will materially affect the operations of the Trust.The fair value of financial assets and liabilities at December 31, 2012 and 2011, approximates their carrying amount. All financial assets andliabilities fall due within 12 months.9 RELATED PARTY TRANSACTIONSThe Trust received dividend income of £2,383 million (2011: £2,175 million; 2010: £2,863 million) in respect of the dividend access share. TheTrust made distributions of £2,383 million (2011: £2,175 million; 2010: £2,863 million) to the B shareholders of the Company.The Company pays the general and administrative expenses of the Trust including the auditors’ remuneration.

eports.shell.com Shell Annual Report and Form 20-F 2012 175Cross reference to Form 20-FCROSS REFERENCE TO FORM 20-FPART IPAGESItem 1. Identity of Directors, Senior Management and Advisers N/AItem 2. Offer Statistics and Expected Timetable N/AItem 3. Key InformationA. Selected financial data 10, 91B. Capitalisation and indebtedness 44-45C. Reasons for the offer and use of proceeds N/AD. Risk factors 13-15Item 4. Information on the CompanyA. History and development of the company 11, 16-27, 29, 35-37, 89B. Business overview 8-9,11-12, 14-41, 46-51, 138-146C. Organisational structure 11, E2-E5D. Property, plant and equipment 16-40, 47-50, 155-156Item 4A. Unresolved Staff CommentsN/AItem 5. Operating and Financial Review and ProspectsA. Operating results 8-10, 12, 14-41, 130-132B. Liquidity and capital resources 16-21, 29, 35-36, 42-45, 83-84, 106-107, 119-122, 128-132, 163, 174C. Research and development, patents and licences, etc. 18-19, 56, 108D. Trend information 8-9, 11-12, 16-23, 35-40E. Off-balance sheet arrangements 45F. Tabular disclosure of contractual obligations 45G. Safe harbour 45Item 6. Directors, Senior Management and EmployeesA. Directors and senior management 52-55, 78-79B. Compensation 61-76C. Board practices 52-54, 56-59, 66-67, 77-88D. Employees 46, 112E. Share ownership 46, 58, 63-76, 89, 106, 132-134Item 7. Major Shareholders and Related Party TransactionsA. Major shareholders 88-90B. Related party transactions 58, 105, 116-117, 166-167, 174C. Interests of experts and counsel N/AItem 8. Financial InformationA. Consolidated Statements and Other Financial Information 38, 42-45, 96-137, 157-174B. Significant Changes 56Item 9. The Offer and ListingA. Offer and listing details 92B. Plan of distribution N/AC. Markets 89D. Selling shareholders N/AE. Dilution N/AF. Expenses of the issue N/AItem 10. Additional InformationA. Share capital 44, 46, 58, 74, 89-90, 101, 128, 132-134, 160, 164B. Memorandum and articles of association 85-88C. Material contracts 58D. Exchange controls 94E. Taxation 94-95F. Dividends and paying agents 56, 85-86, 89, 93, 95G. Statement by experts N/AH. Documents on display 3I. Subsidiary information N/AItem 11. Quantitative and Qualitative Disclosures About Market Risk 83-84, 103-110, 118, 128-132, 163, 174Item 12. Description of Securities Other than Equity Securities 89, 93-94REFERENCES AND OTHER

176 Shell Annual Report and Form 20-F 2012 reports.shell.comCross reference to Form 20-FPART IIPAGESItem 13. Defaults, Dividend Arrearages and Delinquencies N/AItem 14. Material Modifications to the Rights of Security Holders and Use of Proceeds N/AItem 15. Controls and Procedures 83-84, 97, E6-E7Item 16. [Reserved]Item 16A. Audit committee financial expert 77, 80Item 16B. Code of Ethics 78Item 16C. Principal Accountant Fees and Services 81, 136, 167, 174Item 16D. Exemptions from the Listing Standards for Audit Committees 77-78Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 44Item 16F. Change in Registrant’s Certifying Accountant N/AItem 16G. Corporate Governance 77-78Item 16H. Mine Safety Disclosure N/APART IIIPAGESItem 17. Financial Statements N/AItem 18. Financial Statements 96-137, 157-174Item 19. Exhibits 177, E1-E10

eports.shell.com Shell Annual Report and Form 20-F 2012 177ExhibitsINDEX TO THE EXHIBITSExhibit No. Description PAGE1.1 Memorandum of Association of Royal Dutch Shell plc, together with a special resolution of Royal Dutch Shell plc dated May 18, 2010,(incorporated by reference to Exhibit 4.12 to the Registration Statement on Form F-3 (No. 333-177588) of Royal Dutch Shell plcfiled with the Securities and Exchange Commission on October 28, 2011).1.2 Articles of Association of Royal Dutch Shell plc, together with a special resolution of Royal Dutch Shell plc dated May 18, 2010, (incorporatedby reference to Exhibit 4.11 to the Registration Statement on Form F-3 (No. 333-177588) of Royal Dutch Shell plc filed with theSecurities and Exchange Commission on October 28, 2011).2 Dividend Access Trust Deed (incorporated by reference to Exhibit 2 to the Annual Report for fiscal year ended December 31, 2006, onForm 20-F (File No. 001-32575) of Royal Dutch Shell plc filed with the Securities and Exchange Commission on March 13, 2007).4.2 Shell Provident Fund Regulations and Trust Agreement (incorporated by reference to Exhibit 4.7 to the Post-Effective Amendment to RegistrationStatement on Form S-8 (No. 333-126715) of Royal Dutch Shell plc filed with the Securities and Exchange Commission on June 18,2007).4.3 Form of Director Indemnity Agreement (incorporated by reference to Exhibit 4.3 to the Annual Report for the fiscal year ended December 31,2005, on Form 20-F (File No. 001-32575) of Royal Dutch Shell plc filed with the Securities and Exchange Commission on March 13, 2006).4.4 Senior Debt Securities Indenture dated June 27, 2006, among Shell International Finance B.V., as issuer, Royal Dutch Shell plc, as guarantor,and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form F-3(No. 333-126726) of Royal Dutch Shell plc filed with the Securities and Exchange Commission on July 20, 2005, amended fromthen to be dated as of June 27, 2006, and with the parties signatures).4.5 Form of Directors Letter of appointments (incorporated by reference to Exhibits 4.5 - 4.11 to the Annual Report for fiscal year endedDecember 31, 2006, on Form 20-F (File No. 001-32575) of Royal Dutch Shell plc filed with the Securities and Exchange Commission onMarch 13, 2007).4.6 Compromise Agreement with Malcolm Brinded (February 21, 2012) (incorporated by reference to Exhibit 4.6 to the Annual Report for fiscalyear ended December 31, 2011, on Form 20-F (File No. 001-32575) of Royal Dutch Shell plc filed with the Securities and ExchangeCommission on March 15, 2012).7.1 Calculation of Ratio of Earnings to Fixed Charges. E17.2 Calculation of Return on Average Capital Employed (ROACE) (incorporated by reference to page 45 herein).7.3 Calculation of gearing (incorporated by reference to page 9 and Note 15 to the Consolidated Financial Statements on page 119 herein).8 Significant Shell subsidiaries as at December 31, 2012. E212.1 Section 302 Certification of Royal Dutch Shell plc. E612.2 Section 302 Certification of Royal Dutch Shell plc. E713.1 Section 906 Certification of Royal Dutch Shell plc. E899.1 Consent of PricewaterhouseCoopers LLP, London. E999.2 Consent of PricewaterhouseCoopers CI LLP, Jersey, Channel Islands, relating to the Royal Dutch Shell Dividend Access Trust. E10REFERENCES AND OTHER

178 Shell Annual Report and Form 20-F 2012 reports.shell.comSignaturesSIGNATURESThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised theundersigned to sign the Annual Report on Form 20-F on its behalf.RoyalDutchShellplc/s/Peter VoserPeter VoserChief Executive OfficerMarch 13, 2013

eports.shell.com Shell Annual Report and Form 20-F 2012 E1ExhibitsEXHIBIT 7.1CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES$ MILLION2012 2011 2010 2009 2008Pre-tax income from continuing operations before income from equity investees 41,341 46,923 29,391 16,044 43,374Total fixed charges 1,712 1,608 1,684 1,669 2,009Distributed income from equity investees 10,573 9,681 6,519 4,903 9,325Less: interest capitalised 567 674 969 1,088 870Total earnings 53,059 57,538 36,625 21,528 53,838Interest expensed and capitalised 1,461 1,209 1,218 902 1,371Interest within rental expense 251 399 466 767 638Total fixed charges 1,712 1,608 1,684 1,669 2,009Ratio of earnings to fixed charges 30.99 35.78 21.75 12.90 26.80REFERENCES AND OTHER

E2 Shell Annual Report and Form 20-F 2012 reports.shell.comExhibitsEXHIBIT 8Significant subsidiariesSignificant subsidiaries at December 31, 2012, and Shell’spercentage of share capital (to the nearest whole number) are set outbelow. All of these subsidiaries have been included in the“Consolidated Financial Statements” of Shell on pages 99-137. Thoseheld directly by the Company are marked with an asterisk (*). Acomplete list of investments in subsidiaries, jointly controlled entitiesand associates will be attached to the Company’s annual return madeto the Registrar of Companies.Company name % Country of incorporation Principal activities Class of shares heldShell Development (Australia) Proprietary Limited 100 Australia Upstream OrdinaryShell Energy Holdings Australia Limited 100 Australia Upstream OrdinaryQatar Shell GTL Limited 100 Bermuda Upstream OrdinaryShell Deepwater Borneo Limited 100 Bermuda Upstream OrdinaryShell International Trading Middle East Limited 100 Bermuda Upstream OrdinaryShell Brasil Petroleo Ltda 100 Brazil Upstream OrdinaryShell Canada Energy 100 Canada Upstream OrdinaryShell Canada Exploration 100 Canada Upstream Membership InterestShell Canada Resources 100 Canada Upstream Membership InterestSchiehallion Oil and Gas Limited 100 Cayman Islands Upstream OrdinaryShell EP Holdingselskab Danmark ApS 100 Denmark Upstream OrdinaryShell Gabon 75 Gabon Upstream OrdinaryShell Upstream Gabon SA 100 Gabon Upstream OrdinaryFerngasbeteiligungsgesellschaft mbH 100 Germany Upstream OrdinaryShell Erdgas Marketing GmbH & Co. KG 50 Germany Upstream EquityShell Erdgas Beteiligungsgesellschaft mbH 100 Germany Upstream OrdinaryShell Exploration and Production Libya GmbH 100 Germany Upstream OrdinaryShell Verwaltungsgesellschaft Fur Erdgasbeteiligungen mbH 100 Germany Upstream OrdinaryShell E&P Ireland Limited 100 Ireland Upstream OrdinaryShell Italia E&P Spa 100 Italy Upstream OrdinarySarawak Shell Berhad 100 Malaysia Upstream OrdinaryShell MDS (Malaysia) Sendirian Berhad 72 Malaysia Upstream OrdinaryShell Abu Dhabi B.V. 100 The Netherlands Upstream OrdinaryJordon Oil Shale Company B.V. 100 The Netherlands Upstream OrdinaryShell Azerbaijan Exploration and Production B.V. 100 The Netherlands Upstream OrdinaryShell Caspian B.V. 100 The Netherlands Upstream OrdinaryShell Deepwater Tanzania B.V. 100 The Netherlands Upstream OrdinaryShell E and P Offshore Services B.V. 100 The Netherlands Upstream OrdinaryShell Egypt N.V. 100 The Netherlands Upstream OrdinaryShell Egypt Deepwater B.V. 100 The Netherlands Upstream OrdinaryShell Egypt Shallow Water B.V. 100 The Netherlands Upstream OrdinaryShell EP Middle East Holdings B.V. 100 The Netherlands Upstream OrdinaryShell Exploration and Production Investments B.V. 100 The Netherlands Upstream OrdinaryShell Generating (Holding) B.V. 100 The Netherlands Upstream OrdinaryShell Global Solutions International B.V. 100 The Netherlands Upstream OrdinaryShell International Exploration and Production B.V. 100 The Netherlands Upstream OrdinaryShell Kazakhstan Development B.V. 100 The Netherlands Upstream Redeemable, non-redeemableShell Olie – OG Gasudvinding Danmark B.V. 100 The Netherlands Upstream OrdinaryShell Sakhalin Holdings B.V. 100 The Netherlands Upstream OrdinaryShell Salym Development B.V. 100 The Netherlands Upstream Redeemable, non-redeemableShell Western LNG B.V. 100 The Netherlands Upstream OrdinaryEnergy Holdings Offshore Limited 100 New Zealand Upstream OrdinaryEnergy Petroleum Holdings Limited 100 New Zealand Upstream OrdinaryEnergy Petroleum Taranaki Limited 100 New Zealand Upstream OrdinaryShell Energy Asia Limited 100 New Zealand Upstream OrdinaryShell Investments NZ Limited 100 New Zealand Upstream OrdinaryShell New Zealand (2011) Limited 100 New Zealand Upstream OrdinaryShell Nigeria Exploration and Production Company Limited 100 Nigeria Upstream OrdinaryThe Shell Petroleum Development Company of Nigeria Limited 100 Nigeria Upstream OrdinaryA/S Norske Shell 100 Norway Upstream Ordinary

eports.shell.com Shell Annual Report and Form 20-F 2012 E3ExhibitsCompany name % Country of incorporation Principal activities Class of shares heldEnterprise Oil Norge AS 100 Norway Upstream OrdinaryShell Tankers (Singapore) Private Limited 100 Singapore Upstream OrdinaryShell Espana SA 100 Spain Upstream OrdinaryEnterprise Oil Limited 100 United Kingdom Upstream OrdinaryShell Benin Upstream Limited 100 United Kingdom Upstream OrdinaryShell China Exploration and Production Company Limited 100 United Kingdom Upstream OrdinaryShell Energy Europe Limited 100 United Kingdom Upstream OrdinaryShell EP Offshore Ventures Limited 100 United Kingdom Upstream OrdinaryShell Exploration and Production Oman Limited 100 United Kingdom Upstream OrdinaryShell Gas Holdings (Malaysia) Limited 100 United Kingdom Upstream OrdinaryShell U.K. Limited 100 United Kingdom Upstream OrdinarySCCP Oil & Gas, LLC 98 United States of America Upstream Membership InterestShell Energy North America (US), L.P. 100 United States of America Upstream Partnership CapitalShell Exploration & Production Company 100 United States of America Upstream OrdinaryShell Frontier Oil & Gas Inc. 100 United States of America Upstream OrdinaryShell Gulf of Mexico Inc. 100 United States of America Upstream OrdinaryShell Offshore Inc. 100 United States of America Upstream OrdinaryShell Offshore Response Company LLC 100 United States of America Upstream Membership InterestShell Onshore Ventures Inc. 100 United States of America Upstream OrdinaryShell US E&P Investments LLC 100 United States of America Upstream Equity (Voting)SWEPI LP 100 United States of America Upstream Partnership CapitalShell Compania Argentina De Petroleo S.A. 100 Argentina Downstream NominativeShell Australia Limited 100 Australia Downstream OrdinaryShell Refining (Australia) Proprietary Limited 100 Australia Downstream OrdinaryThe Shell Company of Australia Limited 100 Australia Downstream OrdinaryShell Austria Gesellschaft mbH 100 Austria Downstream OrdinaryShell Western Supply & Trading Limited 100 Barbados Downstream OrdinaryBelgian Shell S.A. 100 Belgium Downstream OrdinaryShell Saudi Arabia (Refining) Limited 100 Bermuda Downstream OrdinaryPennzoil-Quaker State Canada Incorporated 100 Canada Downstream OrdinaryShell Canada Limited 100 Canada Downstream OrdinaryShell Chemicals Canada Limited 100 Canada Downstream OrdinaryShell (China) Limited 100 China Downstream OrdinaryShell Tongyi (Beijing) Petroleum Chemical Co. Limited [A] 75 China Downstream OrdinaryShell Czech Republic Akciova Spolecnost 100 Czech Republic Downstream OrdinaryA/S Dansk Shell 100 Denmark Downstream OrdinaryButagaz Sas 100 France Downstream OrdinarySte Des Petroles Shell Sas 100 France Downstream OrdinaryDeutsche Shell GmbH 100 Germany Downstream OrdinaryDeutsche Shell Holding GmbH 100 Germany Downstream OrdinaryShell Deutschland Oil GmbH 100 Germany Downstream OrdinaryShell Hong Kong Limited 100 Hong Kong Downstream OrdinaryShell Hungary Kereskedelmi zRt 100 Hungary Downstream OrdinaryShell India Markets Private Limited 100 India Downstream EquityAico Uno S.r.l. 100 Italy Downstream QuotasShell Italia Holding SpA 100 Italy Downstream OrdinaryShell Italia SpA 100 Italy Downstream OrdinaryShell Malaysia Trading Sendirian Berhad 100 Malaysia Downstream OrdinaryShell Refining Company (Federation Of Malaya) Berhad 51 Malaysia Downstream OrdinaryShell Chemicals Europe B.V. 100 The Netherlands Downstream OrdinaryShell Chemicals Ventures B.V. 100 The Netherlands Downstream OrdinaryShell China Holdings B.V. 100 The Netherlands Downstream OrdinaryShell Gas (LPG) Holdings B.V. 100 The Netherlands Downstream OrdinaryShell MSPO2 Holding B.V. 100 The Netherlands Downstream OrdinaryShell Nanhai B.V. 100 The Netherlands Downstream OrdinaryShell Nederland Chemie B.V. 100 The Netherlands Downstream OrdinaryShell Nederland Raffinaderij B.V. 100 The Netherlands Downstream OrdinaryShell Trademark Management B.V. 100 The Netherlands Downstream OrdinaryREFERENCES AND OTHER[A] Shell voting rights are 80%.

E4 Shell Annual Report and Form 20-F 2012 reports.shell.comExhibitsCompany name % Country of incorporation Principal activities Class of shares heldShell Trading Rotterdam B.V. 100 The Netherlands Downstream OrdinaryShell Trading Russia B.V. 100 The Netherlands Downstream OrdinaryGasnor AS 100 Norway Downstream OrdinaryPilipinas Shell Petroleum Corporation 67 Philippines Downstream OrdinaryShell Polska Sp. Z O.O. 100 Poland Downstream OrdinaryOOO “Shell Neft” 100 Russia Downstream Membership InterestShell Chemicals Seraya (Pte) Limited 100 Singapore Downstream OrdinaryShell Eastern Petroleum (Pte) Limited 100 Singapore Downstream OrdinaryShell Eastern Trading (Pte) Limited 100 Singapore Downstream OrdinaryShell Seraya Pioneer (Pte) Limited 100 Singapore Downstream OrdinaryShell South Africa Holdings (Pty) Limited 100 South Africa Downstream OrdinaryShell South Africa Marketing (Pty) Limited 72 South Africa Downstream OrdinaryShell Brands International AG 100 Switzerland Downstream Registered (Voting)Shell & Turcas Petrol A.S. 70 Turkey Downstream OrdinaryShell Additives U.K. Limited 100 United Kingdom Downstream OrdinaryShell Caribbean Investments Limited 100 United Kingdom Downstream OrdinaryShell Chemicals U.K. Limited 100 United Kingdom Downstream OrdinaryShell International Petroleum Company Limited 100 United Kingdom Downstream OrdinaryShell International Trading and Shipping Company Limited 100 United Kingdom Downstream OrdinaryShell Trading International Limited 100 United Kingdom Downstream OrdinaryThe Shell Company of Thailand Limited 100 United Kingdom Downstream OrdinaryThe Shell Company of Turkey Limited 100 United Kingdom Downstream OrdinaryThe Shell Company (W.I.) Limited 100 United Kingdom Downstream OrdinaryCriterion Catalysts & Technologies L.P. 100 United States of America Downstream Partnership CapitalEquilon Enterprises LLC 100 United States of America Downstream Membership InterestPennzoil-Quaker State Company 100 United States of America Downstream OrdinaryQuaker State Investment Corporation 100 United States of America Downstream OrdinarySan Pablo Bay Pipeline Company LLC 100 United States of America Downstream Membership InterestSCOGI, G.P. 100 United States of America Downstream EquityShell Chemical LP 100 United States of America Downstream Partnership CapitalShell Chemicals Arabia LLC 100 United States of America Downstream OrdinaryShell Gom Pipeline Company LLC 100 United States of America Downstream Membership InterestShell Pipeline Company LP 100 United States of America Downstream Partnership CapitalShell Trading (US) Company 100 United States of America Downstream OrdinaryShell Transportation Holdings LLC 100 United States of America Downstream Membership InterestSOPC Holdings East LLC 100 United States of America Downstream Membership InterestSOPC Holdings West LLC 100 United States of America Downstream OrdinaryTMR Company 100 United States of America Downstream OrdinaryShell Bermuda (Overseas) Limited 100 Bermuda Corporate OrdinaryShell Holdings (Bermuda) Limited 100 Bermuda Corporate OrdinaryShell Oman Trading Limited 100 Bermuda Corporate OrdinarySolen Insurance Limited 100 Bermuda Corporate OrdinaryShell Americas Funding (Canada) Limited 100 Canada Corporate OrdinaryShell Finance Luxembourg Sarl 100 Luxembourg Corporate OrdinaryShell Treasury Luxembourg Sarl 100 Luxembourg Corporate OrdinaryB.V. Dordtsche Petroleum Maatschappij 100 The Netherlands Corporate OrdinaryShell Brazil Holding B.V. 100 The Netherlands Corporate OrdinaryShell Finance (Netherlands) B.V. 100 The Netherlands Corporate OrdinaryShell Gas B.V. 100 The Netherlands Corporate CommonShell International Finance B.V. * 100 The Netherlands Corporate OrdinaryShell Nederland B.V. 100 The Netherlands Corporate OrdinaryShell Overseas Investments B.V. 100 The Netherlands Corporate OrdinaryShell Petroleum N.V.* 100 The Netherlands Corporate OrdinaryShell Treasury Centre East (Pte) Limited 100 Singapore Corporate OrdinaryShell Finance Switzerland AG 100 Switzerland Corporate OrdinarySolen Versicherungen AG 100 Switzerland Corporate Registered (Voting)Shell Energy Investments Limited 100 United Kingdom Corporate OrdinaryShell Holdings (U.K.) Limited 100 United Kingdom Corporate OrdinaryShell International Holdings Limited 100 United Kingdom Corporate OrdinaryShell Overseas Holdings Limited 100 United Kingdom Corporate OrdinaryShell Treasury Centre Limited 100 United Kingdom Corporate Ordinary

eports.shell.com Shell Annual Report and Form 20-F 2012 E5ExhibitsCompany name % Country of incorporation Principal activities Class of shares heldShell Treasury Dollar Company Limited 100 United Kingdom Corporate OrdinaryShell Treasury Euro Company Limited 100 United Kingdom Corporate OrdinaryShell Treasury U.K. Limited 100 United Kingdom Corporate OrdinaryThe Shell Petroleum Company Limited 100 United Kingdom Corporate OrdinaryThe Shell Transport and Trading Company Limited 100 United Kingdom Corporate OrdinaryPecten Victoria Company 100 United States of America Corporate OrdinaryShell Leasing Company 100 United States of America Corporate OrdinaryShell Oil Company 100 United States of America Corporate OrdinaryShell Petroleum Inc. 100 United States of America Corporate OrdinaryShell Treasury Center (West) Inc. 100 United States of America Corporate OrdinaryREFERENCES AND OTHER

E6 Shell Annual Report and Form 20-F 2012 reports.shell.comExhibitsEXHIBIT 12.1I, Peter Voser, certify that:1. I have reviewed the Annual Report on Form 20-F of Royal Dutch Shell plc (the Company);2. Based on my knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered bythe report;3. Based on my knowledge, the financial statements, and other financial information included in the report, fairly present in all material respectsthefinancialcondition,resultsofoperationsandcashflowsoftheCompanyasof,andfor,theperiodspresentedinthereport;4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the Company and have:▪ designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which the report is being prepared;▪ designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;▪ evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in the report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by the report based on such evaluation; and▪ disclosed in the report any change in the Company’s internal control over financial reporting that occurred during the period covered by theannual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting;5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe Company’s auditors and the audit committee of the Company’s Board of Directors (or persons performing the equivalent functions):▪ all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the Company’s ability to record, process, summarise and report financial information; and▪ any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controlover financial reporting./s/Peter VoserPeter VoserChief Executive OfficerMarch 13, 2013

eports.shell.com Shell Annual Report and Form 20-F 2012 E7ExhibitsEXHIBIT 12.2I, Simon Henry, certify that:1. I have reviewed the Annual Report on Form 20-F of Royal Dutch Shell plc (the Company);2. Based on my knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered bythe report;3. Based on my knowledge, the financial statements, and other financial information included in the report, fairly present in all material respectsthefinancialcondition,resultsofoperationsandcashflowsoftheCompanyasof,andfor,theperiodspresentedinthereport;4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the Company and have:▪ designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which the report is being prepared;▪ designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;▪ evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in the report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by the report based on such evaluation; and▪ disclosed in the report any change in the Company’s internal control over financial reporting that occurred during the period covered by theannual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting;5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe Company’s auditors and the audit committee of the Company’s Board of Directors (or persons performing the equivalent functions):▪ all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the Company’s ability to record, process, summarise and report financial information; and▪ any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controlover financial reporting./s/Simon HenrySimon HenryChief Financial OfficerMarch 13, 2013REFERENCES AND OTHER

E8 Shell Annual Report and Form 20-F 2012 reports.shell.comExhibitsEXHIBIT 13.1In connection with the Annual Report on Form 20-F of Royal Dutch Shell plc (the Company) 2012, a corporation organised under the laws ofEngland and Wales for the period ending December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (theReport), each of the undersigned officers of the Company certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, to such officer’s knowledge, that:1. The Report fully complies, in all material respects, with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany as of, and for, the periods presented in the Report.The foregoing certification is provided solely for purposes of complying with the provisions of Section 906 of the Sarbanes-Oxley Act of 2002and is not intended to be used or relied upon for any other purpose./s/Peter VoserPeter VoserChief Executive Officer/s/Simon HenrySimon HenryChief Financial OfficerMarch 13, 2013

eports.shell.com Shell Annual Report and Form 20-F 2012 E9ExhibitsEXHIBIT 99.1Consent of Independent Registered Public Accounting FirmWe hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (No. 333-177588, 333-177588-01) and theRegistration Statements on Form S-8 (No. 333-126715, 333-141397 and 333-171206) of Royal Dutch Shell plc of our report dated March 13,2013, relating to the Consolidated Financial Statements and the effectiveness of internal control over financial reporting, which appears in thisAnnual Report on Form 20-F./s/PricewaterhouseCoopers LLPPricewaterhouseCoopers LLPLondonMarch 13, 2013REFERENCES AND OTHER

E10 Shell Annual Report and Form 20-F 2012 reports.shell.comExhibitsEXHIBIT 99.2Consent of Independent Registered Public Accounting FirmWe hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (No. 333-177588, 333-177588-01) and theRegistration Statements on Form S-8 (No. 333-126715, 333-141397 and 333-171206) of the Royal Dutch Shell Dividend Access Trust of ourreport dated March 13, 2013, relating to the Royal Dutch Shell Dividend Access Trust Financial Statements, and the effectiveness of internalcontrol over financial reporting, which appears in this Annual Report on Form 20-F./s/PricewaterhouseCoopers CI LLPPricewaterhouseCoopers CI LLPJersey, Channel IslandsMarch 13, 2013